N.V. Heathorn, Inc. v. County of San Mateo
Decision Date | 23 February 2005 |
Docket Number | No. A105650.,A105650. |
Citation | 25 Cal.Rptr.3d 400,126 Cal.App.4th 1526 |
Court | California Court of Appeals |
Parties | N.V. HEATHORN, INC., Plaintiff and Appellant, v. COUNTY OF SAN MATEO, Defendant and Respondent. |
Stubbs & Leone and Gregory E. Stubbs, Walnut Creek, for Appellant.
Farella, Braun & Martel and Alan E. Harris, Bridget K. Kaman and Carl E. Switzer, San Francisco, for Respondent.
In this action, plaintiff N.V. Heathorn, Inc. (Heathorn), an unpaid subcontractor on a public project, sought to hold defendant County of San Mateo (the County) liable after it discovered that the County failed to obtain a payment bond from the bankrupt general contractor as required by Civil Code section 3247. Heathorn appeals from a judgment of dismissal entered after the trial court sustained the County's demurrer without leave to amend. We reverse, finding the injury resulting from a public entity's failure to discharge its statutory duty to obtain a payment bond from the original contractor on a public project qualifies as an "injury" to support a cause of action under the Government Tort Claims Act. (See Gov.Code, § 815.6.)
Because this is an appeal from a judgment of dismissal sustaining a demurrer without leave to amend, we accept as true all properly pleaded factual allegations in the complaint other than contentions, deductions, or conclusions of fact or law. (White v. Davis (1975) 13 Cal.3d 757, 765, 120 Cal.Rptr. 94, 533 P.2d 222; Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal. Rptr. 601, 487 P.2d 1241.)
The operative complaint alleges that on or about January 19, 1999, Heathorn and Nielsen Dillingham Builders, Inc. (NDBI) entered into a written agreement, effective December of 1998, whereby Heathorn would provide labor and materials for a work of improvement known as the San Mateo County Health Center (County Health Center). At the time Heathorn entered into a contract with NDBI, NDBI was under contract with the County for the overall construction of the County Health Center and was "acting in the capacity of a general contractor on a public works project."
Heathorn contends that on July 27, 2001, NDBI breached the above-described contract and owed Heathorn $423,890.11, plus interest, for the work Heathorn performed on the project.1 On July 31, 2001, Heathorn filed this action against NDBI to recover the amount it claims it was owed. Heathorn then commenced discovery.
In January 2003, NDBI filed for Chapter 11 bankruptcy protection, terminating its contractual obligation to pay Heathorn the unpaid sums due under the contract. In the course of discovery, Heathorn learned that the County had not required NDBI to post a payment bond for the project as required by Civil Code section 3247. Because the County failed to obtain the statutory payment bond from NDBI, which was required as a condition of awarding the contract, Heathorn was deprived of a potential payment source.
Heathorn was allowed to add the County as a defendant and to amend its complaint to allege a new cause of action for breach of the County's mandatory duty to require its general contractor, NDBI, to obtain a payment bond under Civil Code section 3247. On February 20, 2003, Heathorn submitted a claim to the County on account of the damages it sustained by virtue of the unbonded bankruptcy of NDBI. On or about March 25, 2003, the County issued its rejection of Heathorn's claims.
The County interposed a general demurrer based upon two grounds. The first ground was that "Heathorn's inability to collect money due and owing it on a public work of improvement from a statutory payment bond does not give rise to an `injury' under the Government Tort Claims Act." The second ground was that Heathorn's cause of action against the County was time-barred. After giving Heathorn an opportunity to amend its complaint, the trial court sustained the demurrer on the first ground without leave to amend. The court found it unnecessary to address the second ground of the demurrer. After the court entered judgment in favor of the County, Heathorn filed this timely appeal.
"In reviewing the sufficiency of the complaint against the ... [County's] demurrer, we must treat the demurrer as admitting all allegations of the complaint as true.... [I]t is settled law that in evaluating the sufficiency of a complaint against a demurrer a court will consider matters that may be judicially noticed.... [¶] `On demurrer, it is not the function of a trial court, or of this court, to speculate on the ability of a plaintiff to support, at trial, allegations well pleaded.' (Meyer v. Graphic Arts International Union (1979) 88 Cal.App.3d 176, 179, As a reviewing court, we are not bound by the construction of the pleadings by the trial court, but we make our own independent judgment of the sufficiency of the complaint. (Miller v. Bakersfield News-Bulletin, Inc. (1975) 44 Cal.App.3d 899, 901, " (Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1521, 37 Cal.Rptr.2d 810; see also Adelman v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 352, 359, 108 Cal.Rptr.2d 788.)
Consequently, for purposes of analyzing Heathorn's appeal from the County's successful demurrer, we will accept as true Heathorn's allegations that NDBI was a general contractor, Heathorn was its subcontractor, and that Civil Code section 3247 required NDBI to file a payment bond with the County for the project at issue. Any disputes on these factual allegations are premature, and will have to await further court proceedings.
The parties acknowledge the general rule that all government tort liability in California must be based on statute. (Caldwell v. Montoya (1995) 10 Cal.4th 972, 980, 42 Cal.Rptr.2d 842, 897 P.2d 1320.) Under Government Code section 815.6, "[w]here a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty." (See generally Haggis v. City of Los Angeles (2000) 22 Cal.4th 490, 498-499, 93 Cal.Rptr.2d 327, 993 P.2d 983.)
The statutory provisions cited in Heathorn's complaint clearly establish a statutory duty upon a public body, such as the County, to secure a payment bond under the circumstances alleged in Heathorn's complaint. Specifically, Civil Code section 3096 defines "payment bond" as "a bond with good and sufficient sureties that is conditioned for the payment in full of the claims of all claimants and that also by its terms is made to inure to the benefit of all claimants so as to give these persons a right of action to recover upon this bond in any suit brought to foreclose the liens provided for in this title or in a separate suit brought on the bond...." Civil Code section 3247 requires a payment bond as a condition of being awarded a contract by a public entity. It provides in relevant part as follows: "(a) Every original contractor to whom is awarded a contract by a public entity, except as provided in subdivision (d) of Section 7103 of the Public Contract Code, involving an expenditure in excess of twenty-five thousand dollars ($25,000) for any public work shall, before entering upon the performance of the work, file a payment bond with and approved by the officer or public entity by whom the contract was awarded." Civil Code section 3251 makes it illegal for a public entity to pay a contractor unless a payment bond is filed.
As we have seen, "[w]hen an enactment establishes a mandatory governmental duty and is designed to protect against the particular kind of injury the plaintiff suffered, [Government Code] section 815.6 provides that the public entity `is liable' for an injury proximately caused by its negligent failure to discharge the duty." (Haggis v. City of Los Angeles, supra, 22 Cal.4th at p. 499, 93 Cal.Rptr.2d 327, 993 P.2d 983.) The allegations in Heathorn's complaint serve as a predicate for liability under Government Code section 815.6. Heathorn's fourth cause of action alleges that the County breached a statutory obligation established by the Labor Code to assure that NDBI secured a payment bond. Heathorn goes on to allege that "[a]s a result of the County's failure to require that NDBI post a payment bond as required by statute, the obligations of NDBI to pay its sub-contractors is not secured by a bond as required by law and plaintiff has been injured because it cannot collect from [NDBI] any of its unpaid contract payments, interest, penalties, attorneys' fees and the like."
The County counters these assertions by arguing that what is lacking in this case is an allegation setting forth an "injury" as defined by the Government Tort Claims Act. As we have seen, section 815.6 imposes liability only "for an injury" caused by the failure of a public entity to discharge its statutory duty. The definition of "injury" for purposes of section 815.6 is set forth in Government Code section 810.8. As explained by the Supreme Court in Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 9 Cal.Rptr.2d 92, 831 P.2d 317 (Aubry): (Id. at p. 968, 9 Cal.Rptr.2d 92, 831 P.2d 317.) The Law Revision Commission comment to Government Code section 810.8's definition of "injury" states, in part: ...
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