Vita Planning & Landscape Architecture, Inc. v. HKS Architects, Inc.

• Decision Date: 25 September 2015
• Docket Number: A141010
• Citation: 240 Cal.App.4th 763,192 Cal.Rptr.3d 838
• Parties: VITA PLANNING AND LANDSCAPE ARCHITECTURE, INC., Plaintiff and Appellant, v. HKS ARCHITECTS, INC., Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

240 Cal.App.4th 763

192 Cal.Rptr.3d 838

VITA PLANNING AND LANDSCAPE ARCHITECTURE, INC., Plaintiff and Appellant

v.HKS ARCHITECTS, INC., Defendant and Respondent.

A141010

Court of Appeal, First District, Division 5, California.

Filed September 25, 2015

Epstein Law Firm, Robert F. Epstein and Lopez Law Firm, Michael B. Lopez, San Rafael, for Plaintiff and Appellant.

Schwartz & Janzen, LLP, Steven H. Schwartz and Noel E. Macaulay, Los Angeles, for Defendant and Respondent.

Opinion

Jones, P.J.

The trial court granted HKS Architects, Inc.'s (HKS) motion to dismiss Vita Planning and Landscape Architecture, Inc.'s (Vita) complaint against HKS pursuant to Code of Civil Procedure section 410.30, subdivision (a) and entered judgment for HKS.¹ Vita appeals. It contends the court erred by granting HKS's motion to dismiss because: (1) there is no contract between Vita and HKS containing a forum selection clause; (2) HKS's motion was untimely and “procedurally waived”; and (3) enforcing the forum selection clause violates California public policy articulated in section 410.42, which prohibits enforcement of construction contract provisions requiring disputes between contractors and California subcontractors to be litigated outside California.

We conclude HKS established the existence of a contract between HKS and Vita containing a forum selection clause, but section 410.42 prevents enforcement of the forum selection clause. Accordingly, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

The Project

HKS is an architecture firm and a Texas corporation. C.E. Mammoth LLC (Owner) planned to develop a luxury hotel in Mammoth Lakes (Project). Owner hired HKS to provide architectural services for the Project pursuant to an “Agreement Between Owner and Architect” (Prime Agreement). Among other things, the Prime Agreement contained a Texas forum selection clause providing: “[a]s a condition precedent to the institution of any action [or] lawsuit,” that “all disputes shall be submitted to mediation” and that “[a]ll claims, disputes, and other matters in question between the parties arising out of or relating to [the Prime] Agreement ... be resolved by the ... courts in ... Texas.” The Prime Agreement also contained a Texas choice of law provision. Additionally, the Prime Agreement authorized HKS to obtain proposals and hire “[c]onsultants” to perform certain work in connection with the Project. The Prime Agreement was revised as of September 11, 2007, but not signed by Owner and HKS until October 2008.

InSite is a landscape design firm with offices in Berkeley and Napa. In October 2007, InSite sent HKS a proposal to provide landscape architecture design services for the Project (Proposal). The “Scope of Basic Services” section of the Proposal stated InSite would: (1) “support [HKS] ... and other design consultants in the preparation of design and construction documentation”; (2) “conduct a series of reviews of landscape construction”; (3) collaborate with HKS “for hardscape design of the outdoor environment”; and (4) have “primary responsibility for design and construction documentation of all planting, irrigation and associated landscape architectural features.” According to the Proposal, InSite would “[w]ork with the selected contractor and their sub-contractors to clarify the landscape architecture issues and assist the contractor in understanding the design.” Neither InSite nor HKS signed the Proposal, apparently because it contained provisions unacceptable to HKS.

In November 2007, InSite and HKS signed an “Architect and Consultant Agreement and Release” (Release) wherein InSite agreed: (1) HKS “is or will be in the process of negotiating an agreement with ... [ ] Owner”; (2) “it is not certain that ... Owner will execute such an agreement”; (3) “Owner may not pay for any ... invoices submitted by [HKS], including those invoices for services provided by [InSite]. In the event ... Owner does not pay [HKS] for amounts due to [InSite] for services rendered and expenses incurred, [InSite] hereby agrees not to take any legal action against [HKS] relative to such amounts and agrees to release [HKS] for any and all liability arising out of non-payment to [InSite] for any amounts of money due [InSite] and/or for the services rendered by [InSite].” InSite also agreed “once a proposed architect-consultant agreement ... is received by [InSite] from [HKS], [InSite] will have thirty days to review and execute [it]. In the event that the ... [a]greement is not executed by [InSite] within 30 days of receipt, all payments that may otherwise be due and payable to [InSite] will be held by [HKS] until the [a]greement is executed by [InSite].”

Around this time, Vita acquired InSite. Vita is a California corporation with a main office in Marin County. HKS sent Vita a “Standard Form of Agreement Between Architect and Consultant” (Contract). The Contract states Vita is to perform “[l]andscape architectural services” for the Project. The Contract attaches the Proposal as an exhibit and incorporates it to describe the scope of Vita's services. Sections 1.1 and 1.3 of the Contract incorporate the terms of the Prime Agreement. Section 8.1 provides in relevant part, “[s]ubject to Section 8.2, any claim, dispute or other matter in question arising out of or related to [the Contract] shall be subject to the same dispute resolution provisions as set forth in the Prime Agreement.” Section 8.2 provides, “If the claim, dispute or other matter in question arising out of or related to [the Contract] is unrelated to a dispute between [HKS] and Owner, or if [Vita] is legally precluded from being a party to the dispute resolution procedures set forth in the Prime Agreement, then claims, disputes or other matters in question shall be resolved in accordance with this Section 8.2. Any such claim, dispute or matter in question shall be subject to mediation as a condition precedent to binding dispute resolution.” Pursuant to section 10.1, the Contract “shall be governed by the law provided in the Prime Agreement.”

Neither Vita or HKS signed the Contract, but Vita performed work in 2008 while the Project was in the “design phase” and sent invoices to HKS. Owner began having financial problems before construction commenced; in 2008, work on the Project was “placed on hold.” Owner “ceased paying for any work,” leaving HKS “with extensive unpaid bills” for its own services, and those provided by its “consultants.” HKS obtained a judgment against Owner in 2010 in Texas for $1,617,073.70 but was “unable to recover anything on that judgment, despite diligent efforts to do so.”

The Operative Complaint

In 2013, Vita filed a complaint against HKS, which HKS answered. Vita's operative first amended complaint (complaint) alleged claims for: (1) breach of contract; (2) unjust enrichment; (3) quantum meruit; and (4) breach of the implied covenant of good faith and fair dealing. In its breach of contract cause of action, Vita alleged “[o]n or about September 11, 2007, [Vita] and [HKS] entered into [a] contractual agreement, evidenced by a writing, a true and correct copy of which is attached hereto as Exhibit A ... whereby [HKS] agreed to pay for services rendered by [Vita], in connection with the work of improvement known as the ‘[Project].’ ” According to the complaint, HKS breached that contract “by failing and refusing to satisfy its obligation to pay” Vita for its performance, and “[a]s a direct and proximate result of [HKS's] breach of the Contract,” Vita had “been damaged in the amount of $370,650.53, which includes costs for labor, expenses, and interest.” HKS answered the complaint, responded to written discovery propounded by Vita, and attended a court-ordered mediation. HKS also appeared by telephone at two case management conferences.

HKS's Motion to Dismiss and Vita's Opposition

Approximately seven months after answering the complaint, HKS moved to enforce the forum selection clause and dismiss or stay the action pursuant to section 410.30.² HKS argued “the contract upon which [Vita] has filed suit incorporates the terms of [the Prime Agreement], which in turn contains forum selection clauses requiring any action to be filed in ... Texas.” HKS also argued the forum selection clause was “valid, enforceable, applicable to the dispute, and mandatory[.]”

In a supporting declaration, HKS principal Donald Harrier averred Owner hired HKS pursuant to the Prime Agreement, which “provides that any lawsuits must be filed in ... Texas.” In turn, HKS hired Vita as one of its “consultants” on the Project “to provide landscaping architectural services.”

Harrier sent the Contract to Vita. According to Harrier, while Vita “never signed the [C]ontract, it performed services thereafter, and the parties adopted its provisions by performance thereunder.” Harrier explained that HKS had InSite sign the Release—which contained a “pay-if-paid” clause—because HKS did “not want to be in a situation in which it must pay for work performed by consultants, when the [O]wner ... is not paying [HKS] for that work. ...”³ Harrier's declaration attached the Prime Agreement, the Contract, and the Release.

Vita raised several arguments in opposition. First, it characterized HKS as a “general contractor” and itself as a “subcontractor” and claimed the forum selection clause in the Contract was unenforceable under section 410.42. Vita also argued the case implicated “fundamental public policy concerning pay provisions in subcontractor-contractor contracts,” and suggested enforcing the forum selection clause would violate California public policy, under which “pay-if-paid” provisions are unenforceable. Next, Vita argued the motion was untimely and HKS “procedurally waived” its right to enforce the forum selection clause by litigating the case in California. Vita also contended “enforcing the forum selection clause in the unsigned” Contract—which it described as a “contract of adhesion”—would be unreasonable. Finally, Vita claimed there...