BMC W. Corp. v. Town Ctr. Courtyard, LLC

• Decision Date: 28 December 2020
• Docket Number: D076123
• Court: California Court of Appeals Court of Appeals
• Parties: BMC West Corporation, LLC, Plaintiff and Respondent, v. TOWN CENTER COURTYARD, LLC, Defendant and Appellant.

BMC West Corporation, LLC, Plaintiff and Respondent, v. TOWN CENTER COURTYARD, LLC, Defendant and Appellant.

D076123

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

December 28, 2020

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. ECU09255)

APPEAL from a judgment of the Superior Court of Imperial County, L. Brooks Anderholt, Judge. Affirmed.

Law Offices of John A. Tkach and John A. Tkach; Timothy G. Scanlon; Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, Catherine Elizabeth Bennett and R. Jeffrey Warren for Defendant and Appellant Town Center Courtyard, LLC.

Finch, Thornton & Baird, Jason Thornton, P. Randolph Finch, Andrea L. Petray and Christopher D. F. Foster for Plaintiff and Respondent BMC West Corporation, LLC.

Defendant and appellant Town Center Courtyard, LLC (Town) appeals from a summary judgment in favor of plaintiff and respondent BMC West Corporation (BMC) on BMC's action to enforce a mechanics lien and stop notice against Town. BMC, a Delaware corporation, filed its lawsuit days after it had converted to a limited liability company, BMC West, LLC (LLC). The trial court granted BMC's motion for summary judgment, ruling BMC had standing under Delaware law because it and LLC were the same entity, and Town had not shown triable issues of material fact regarding the sums due BMC. On appeal, Town contends BMC no longer held a vested interest in the liens and lacked standing to sue because the liens had transferred to LLC. Town further contends it presented direct evidence via deposition testimony and documents showing only 96 percent of BMC's contract had been completed, raising a triable issue of fact as to BMC's entitlement to damages. We disagree and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND¹

Town is the owner of a construction project in the city of El Centro (the project). It contracted with a general contractor, Patterson Builders, which subcontracted with BMC to perform rough carpentry, trusses and other workfor payment of $1,533,410. BMC, which was licensed with the California Contractors State License Board, submitted payment applications to Patterson Builders, which in turn submitted to Town payment applications encompassing BMC's applications. Town paid Patterson Builders $1,345,004.91 for BMC's work, and Patterson Builders paid BMC $897,044.45.

In May 2016, BMC recorded a mechanics lien in the sum of $688,564.15. It recorded an amended lien for the same amount in June 2016. Thereafter, Town paid BMC $240,081.09. In June 2016, BMC served Town with a stop payment notice to withhold the sum of $688,564.15.

In August 2016, BMC converted to a limited liability company—BMC West LLC—pursuant to Section 18-201 of the Delaware Limited Liability Company Act. The Delaware Secretary of State certified that LLC had a legal existence as of August 1, 2016, but was formed on October 13, 1987, the formation date of BMC. Two days later, BMC filed its complaint against Town to foreclose on its mechanics lien and to enforce a stop payment notice. While the action was pending, BMC filed partial releases of the lien so that $447,960.06 was the remaining sum it claimed was owed.

BMC moved for summary judgment or alternatively summary adjudication of issues. It argued there were no disputes as to all of the elements of its mechanics lien cause of action; that $447,960.06 was the undisputed principal amount due for its work on the project based on the outstanding balance of its subcontract, and that sum was also the amount allocable to it in Town's payments to Patterson Builders. BMC argued it timely recorded its amended mechanics lien and filed suit, meeting the statutory requirements for such a cause of action. It argued it was undisputed it complied with the procedural requirements to enforce its stopnotice. BMC argued it was entitled to prejudgment interest on its claims. It asked the court to enter judgment in its favor for $538,967.68 for the principal balance due, $60 in fees for recording the liens and partial releases, and $90,947.62 in prejudgment interest.

In opposition, Town argued BMC was not entitled to summary judgment because it had no standing by virtue of being "merged out of existence" before the complaint was filed. According to Town, the holder of the lien rights was LLC, which was not a party to the action. Town maintained the enforceability of the mechanics lien and stop notice ran with the debt, and under Delaware law, specifically, title 8 of Delaware Code section 266, subdivision (d) (at times, section 266), an entity's assets, including the debt, runs to the new entity so that only LLC had the right to enforce it and pursue remedies under California's mechanics lien and stop notice laws. Town argued once BMC ceased to exist, it was no longer the proper party to advance the claims at issue. Town additionally argued there was a triable issue of material fact as to the amount of damages given evidence that Patterson Builders claimed BMC performed only about 96 percent of the work and was not owed more than $334,949.26, while BMC contended it was owed $447.960.06.²

As support for its damages contention, Town argued BMC did not submit admissible evidence of its change orders and in any event the change orders did not add up to the over $1.5 million that BMC claimed was the value of its work. Town argued BMC did not meet its summary judgment burden, as BMC and Patterson Builders disagreed about how much workBMC performed; Patterson Builders contended BMC performed only 96 percent of the original contracted scope of work and that BMC's value added to the project was only $1,472,075.20. Finally, Town argued it and Patterson Builders paid BMC $1,137,125.94, leaving only $334,949.26 owed BMC on the 96 percent of the work it performed. Town presented deposition excerpts from Dru Patterson to support that proposition.

The trial court granted BMC's motion. With regard to BMC's conversion to an LLC, the court ruled BMC West Corporation and LLC were the same entity pursuant to Delaware law. It found several of BMC's facts related to its causes of action were undisputed and that Town's evidence in dispute was "ambiguous at best," requiring the court to draw inferences that were not reasonably deducible from any evidence.

Town filed this appeal from the ensuing judgment.

DISCUSSION

I. Summary Judgment Standards

A plaintiff may move for summary judgment on grounds there is no defense to the action, and the motion "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subds. (a)(1), (c); Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) "A plaintiff . . . has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant . . . shall not rely upon the allegations or denials of its pleadings to show that a triable issue of materialfact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto." (Code Civ. Proc., § 437c, subd. (p)(1); see Los Alamitos Unified School Dist. v. Howard Contracting, Inc. (2014) 229 Cal.App.4th 1222, 1225.) "In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact." (Code Civ. Proc., § 437c, subd. (c).) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)

Our review is de novo. (Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248, 273; Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347.) The lower court's reasoning is irrelevant; we owe it no deference and review the ruling not the rationale. (Coral Construction, Inc v. City and County of San Francisco (2010) 50 Cal.4th 315, 336; Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1283.) We assume the trial court's role and redetermine the merits of the motion (Pasadena Metro Blue Line Construction Authority v. Pacific Bell Telephone Co. (2006) 140 Cal.App.4th 658, 663), considering all of the evidence presented by the parties (except for evidence that the trial court properly excluded), liberally construing the evidence in support of Town, the party opposing summary judgment, and resolving all doubts about whethertriable issues of material fact exist in Town's favor. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1039; Caliber Paving Company, Inc. v. Rexford Industrial Realty and Management, Inc. (2020) 54 Cal.App.5th 175, 180.) "Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw...