Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County. No. RIC411026, John J. Lynch, Judge. (Retired Judge of the former L.A. Mun. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.).
Hartnett Law Group and Patrick M. Hartnett for Plaintiff and Appellant.
Law Offices of George S. Burns and George S. Burns for Defendant and Appellant.
OPINION
MILLER J.
Kraft Ranch, LLC (Kraft) sued CPH Sierra Peak, LP (Sierra) for (1) breach of written contract; (2) breach of oral contract; (3) specific performance; (4) conversion/damages to real property; (5) unjust enrichment; (6) being an unlicensed contractor (Bus. & Prof. Code, § 7031); (7) deceit; and (8) negligent misrepresentation. Prior to trial, the allegations of breach of oral contract and conversion/damages to real property were stricken by the trial court. The remaining allegations, with the exception of the specific performance cause of action, were dismissed following motions for nonsuit. In regard to the specific performance cause of action, the trial court ordered that Sierra complete the construction work required by the contract, and convey the relevant parcel of property to Kraft.
On appeal, Sierra contends the trial court erred by requiring Sierra to specifically perform the construction work. On cross-appeal, Kraft contends that the trial court erred by granting the motion for nonsuit on the unlicensed contractor cause of action (Bus. & Prof. Code, § 7031). We affirm the judgment.
FACTUAL AND PROCEDURAL HISTORY
Richard Ashley (Ashley) is the sole member of Kraft. In 1998, Kraft sold a parcel of property (the Property), located in the City of Corona, to New West Properties (New West). The Property was comprised of 190 acres of undeveloped land. The Property was surrounded by steep hillsides. In the valleys between the hillsides were flatter portions of ground. The Property was filled with oak and sycamore trees, riparian habitats, a spring-fed reservoir, and the prior owner’s residential structures and a ranch. The purchase price was $2,100,000. As part of the sale agreement, New West agreed that, following the close of escrow, it would record a subdivision map for the Property establishing separate legal parcels. Lot 91 of the subdivision would be approximately 35 acres. New West would then reconvey Lot 91 to Kraft for no consideration/payment. Lot 91 would be used as the site of Ashley’s personal residence.
CPH Sierra Peak LLC (Peak) then purchased the Property from New West. In March 2001, Peak and Kraft agreed that Peak would convey Lot 91 to Kraft after the Property was subdivided, and after Peak (1) rough graded Lot 91 in accordance with the approved final grading plans; (2) extended the utilities to the top of the slope on Lot 91; (3) constructed a driveway on Lot 91; and (4) removed an existing reservoir and retaining wall on Lot 91.
CPH Sierra Peak LP is the party to this appeal, as opposed to CPH Sierra Peak LLC. To assist the reader, we will refer to appellant and cross-respondent, CPH Sierra Peak LP, as “Sierra” and CPH Sierra LLC as “Peak.”
On July 31, 2002, Peak entered into a “Development, Management and Construction Agreement” with Capital Pacific Homes, Inc. (Capital). Peak and Capital agreed that Capital would serve as the general contractor for the construction of 90 detached single-family homes on a portion of the Property. Capital is classified as a “B” general building contractor. On August 1, 2002, Capital entered into a subcontracting agreement with Sukut Construction, Inc. (Sukut). Sukut was hired to complete grading and erosion control/drainage work.
At the time of trial, on February 4, 2009, the grading on Lot 91 was substantially completed; however, it was not completely finished. Capital did not complete the work, or have Sukut complete the work, because Capital’s parent company, Capital Pacific Holdings, Inc., was in receivership “due to the current economy and the housing business.” Items that still needed to be completed included: an asphalt driveway, concrete terrace drains, and “some” landscaping. A Capital employee, Mark Mullin, estimated that the remaining work would cost $339,000, and take four to six weeks to complete.
The trial court ordered specific performance. The trial court ordered that Sierra transfer title back to Kraft, finish grading Lot 91, complete the driveway, and finish the landscaping. After trial, on July 8, 2009, the County of Riverside recorded a grant deed that conveyed Lot 91 from Sierra to Kraft for no consideration.
DISCUSSION
A. APPEAL
1. CONTENTION
Sierra contends that the trial court erred by ordering Sierra to specifically perform construction work, because (1) Sierra was not a party to a contract with Kraft; (2) specific performance would require Sierra to perform illegal acts, (3) damages are an available remedy; and (4) the construction is complex and requires the consent of third parties. We disagree with Sierra’s contentions.
2. PARTIES
We first address Sierra’s contention that the trial court erred by ordering it to specifically perform construction activities, because Kraft was not a party to the contract with Sierra.
Specific performance may only be ordered if the party seeking specific performance establishes the existence of the alleged contract. (Store Properties v. Neal (1945) 72 Cal.App.2d 112, 116.) We review the language of the contracts to determine if an agreement existed between Kraft and Sierra. (Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 979.) In addition to the contracts, we look to extrinsic evidence, which can include the surrounding circumstances under which the parties negotiated or entered into the contract, as well as the subsequent conduct of the parties. (Id. at p. 980.) We apply the de novo standard of review. (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266-1267.)
In 2001, Peak purchased the Property from New West. As part of the 2001 agreement, Peak agreed to convey the 35-acre parcel to Kraft once the Property was subdivided. The 2001 agreement provided that Peak would provide various improvements to the 35-acre parcel prior to conveying it to Kraft, such as rough grading and extending the utilities.
A July 31, 2002, agreement reflected that Sierra was contemplating acquiring the Property from Peak. The agreement provided that if and when Sierra acquired the Property, Peak would assign to Sierra all of Peak’s rights and obligations under the 2001 agreement, and that Sierra would assume all of Peak’s unperformed obligations under the 2001 agreement.
In September 2007, Sierra signed a quitclaim deed conveying part of the Property to the Sierra Peak Homeowner’s Association. Accordingly, it appears that Sierra became the owner of the Property at some point prior to September 2007. As a result of Sierra owning the property, Sierra assumed Peak’s obligations to make improvements to Lot 91. In sum, Sierra is a party to the agreement.
We now examine whether Kraft is a party to the contract. The body of the July 31, 2002, contract reflects that Kraft is a party to the agreement, while the signature line of the agreement reads “2002 Kraft Ranch Investors, LLC.” Ashley, the person who signed the July 31, 2002, agreement on behalf of Kraft, testified that he had never been affiliated with an entity known as 2002 Kraft Ranch Investors, LLC. Ashley further testified that the July 31, 2002, agreement was drafted by opposing counsel and he never noticed that the signature line read “2002 Kraft Ranch [Investors, ] LLC, ” until a time close to trial or during trial. Ashley stated that he never introduced himself as 2002 Kraft Ranch Investors, LLC, and that he only intended to act on behalf of Kraft.
Based upon the foregoing evidence, it appears that Kraft was the intended party to the July 2002 agreement, especially in light of Kraft’s name being included in the body of the agreement, and Ashley’s testimony that he has never been affiliated with an entity known as 2002 Kraft Ranch Investors, LLC. Therefore, in sum, Sierra and Kraft were parties to a contract in which Sierra agreed to perform certain improvements to the 35-acre parcel, and then convey the parcel to Kraft.
Sierra argues that the trial court erred by ordering specific performance because Kraft was not a party to the contract. Sierra provides little explanation for its legal conclusion. For example, Sierra does not explain if “2002 Kraft Ranch Investors, LLC” is a legal entity; Sierra does not explain if Ashley was somehow affiliated with an entity known as 2002 Kraft Ranch Investors, LLC; and Sierra does not cite evidence reflecting that Ashley represented himself to be a member of an entity known as “2002 Kraft Ranch Investors, LLC, ” during contract negotiations. Based upon the lack of reasoning in Sierra’s contention, we find the contention to be unpersuasive.
3. AVAILABILITY OF DAMAGES
Kraft contends that the trial court erred by awarding specific performance because monetary damages would be an adequate remedy. We disagree.
A grant of specific performance is reviewed under the abuse of discretion standard. (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.) “An abuse of discretion occurs only where it is shown that the trial court exceeded the bounds of reason. [Citation.] It is a deferential standard of review that requires us to uphold the trial court’s determination, even if we disagree with it, so long as it is reasonable. [Citation.]” (Stull v. Sparrow (2001) 92 Cal.App.4th 860, 864 [Fourth Dist., Div. Two].)
The law presumes that a breach of an agreement involving the transfer of real property cannot be adequately remedied by monetary damages. (Union Oil Co. of California v. Greka Energy Corp. (2008) 165 Cal.App.4th 129, 134 (Union Oil).) This presumption extends to covenants involving maintenance and improvements on the property. (Ibid.; see also Ellison v. Ventura Port District (1978) 80 Cal.App.3d 574, 579-580 (Ellison).) The presumption is extended to these covenants because a clause to maintain and/or improve land often cannot be separated from the total transaction. (Ellison, at pp. 579-580.) Accordingly, specific performance of a maintenance or improvement covenant can be granted if the improvements are part of a contract involving the transfer of land. (Ibid.)
For example, in Union Oil, Unocal sold several oil fields. Each contract and grant deed required the buyer to plug the oil wells that were no longer being used. (Union Oil, supra, 165 Cal.App.4th at p. 132.) This involved removing the well’s concrete pad, cleaning the area around the well, reconstructing the soil, and obtaining “‘closure’” approval from regulatory agencies. (Id. at p. 133.) Greka bought oil companies that had acquired oil fields from Unocal, but Greka did not plug the oil wells within the contractual time schedule. (Id. at p. 132.) The appellate court inferred from the evidence that Unocal lowered its purchase price because of the buyers’ agreement to plug the idle wells. (Id. at p. 136.) Accordingly, the appellate court concluded that “the ‘maintenance clause [could not] be separated from the total transaction, ’” and therefore, the trial court did not err by ordering specific performance of the well-plugging duties. (Id. at p. 135.)
In the instant case, Kraft sold the Property to New West under the condition that Lot 91 would be conveyed back to it. As part of the agreement with New West, it was understood that New West would “have no obligation to provide any improvements” for Lot 91. Accordingly, the purchase price of the Property was not affected by an obligation to provide improvements.
When Peak bought the property from New West, Kraft made an agreement with Peak, which provided that Peak would subdivide Lot 91 from the rest of the Property, and make various improvements to Lot 91. Peak agreed that prior to conveying Lot 91 to Kraft, Peak would rough grade Lot 91, extend the utilities, and construct a driveway.
Although the construction activities were not part of the original land sale, the construction activities were part of the contract involving the transfer of land back to Kraft. Since the construction activities were part of a contract for a transfer of land, we conclude that the order of specific performance was within reason, because the trial court could view the construction activities as part of the total transaction. As a result, the trial court’s ruling is within reason. In sum, we are not persuaded that the trial court abused its discretion.
4. ILLEGAL ACT
Sierra contends that the trial court erred by ordering specific performance because the order requires Sierra to perform illegal acts. Specifically, Sierra asserts that the trial court’s order would require it to (1) trespass on Lot 91, because Lot 91 was conveyed to Kraft in 2009; and (2) perform unlicensed construction work, because Sierra does not have the proper contractor’s license to perform the required work. We disagree.
A court cannot order a party to perform an unlawful act. (Civ. Code, § 3390, subd. (3).)
a) Trespass
A trespass occurs when a person, without the license of the owner or legal occupant, willfully injures the real property of another; carries away soil or stone of another; or enters the land of another where signs forbidding trespass are displayed. (Pen. Code, § 602.) There are express licenses and implied licenses. (Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 36.) “‘An implied license is one which is presumed to have been given from the words, acts or passive acquiescence of the party authorized to give it.’ [Citation.]” (Zellers v. State of California (1955) 134 Cal.App.2d 270, 273.)
In the instant case, Kraft sued for specific performance. Kraft’s suit for specific performance implies the granting of a license to enter Kraft’s property, because entering the property is essential to completing the agreement. (See Bomberger v. McKelvey (1950) 35 Cal.2d 607, 618-619 [“plaintiffs acted within their rights in fully performing the agreement, that they did not commit trespass”].) Further, if Kraft were to revoke the license for Sierra to enter Lot 91 and complete the contract, then the trial court could compel Kraft to obey its order for specific performance. (Code Civ. Proc., § 128, subd. (a)(4).) In sum, we are not persuaded that the trial court’s order requires Sierra to illegally trespass on Kraft’s real property.
b) Unlicensed Contractor
Sierra contends that it is not licensed to perform grading work, and therefore, the trial court erred by ordering Sierra to perform grading. We do not agree that the trial court erred. Sierra relies on two different points of law in its argument; therefore, we separate the discussion of this contention into two parts.
i) Third Party
First, Sierra relies on the following law to support its argument: “The following obligations cannot be specifically enforced: [¶]... [¶] 4. An agreement to procure the act or consent of the wife of the contracting party, or of any other third person.” (Civ. Code, § 3390, subd. (4).) The agreement in dispute involves rough grading, extending utilities, and constructing a driveway; the agreement does not involve procuring the consent of a third person. Accordingly, we do not see the applicability of the cited code section.
Further, we note Mullen testified that Capital was employed to perform the rough grading on Lot 91. Mullen further testified that the grading work was “substantially complet[ed]”; however, some items still needed to be finished. Accordingly, to the extent it can be argued that the agreement impliedly requires the procurement of a contractor’s services, it appears that a contractor has already consented to perform the work, i.e., Capital and/or Sukut, and therefore, there is no need to “procure the act or consent... of any other third person.” (Civ. Code, § 3390, subd. (4).)
Sierra also contends that the trial court’s order amounts to an abuse of discretion because third party approvals will be required to complete performance, such as approvals by City inspectors. The fact that a contract requires a public entity’s approval of the construction does not preclude an award of specific performance. (Bleecher v. Conte (1981) 29 Cal.3d 345, 354-355.) Accordingly, we find Sierra’s argument to be unpersuasive.
ii) Lawful Performance
Sierra also relies on the following law to support its contention: “The following obligations cannot be specifically enforced: [¶]... [¶] 3. An agreement to perform an act which the party has no power lawfully to perform when required to do so.” (Civ. Code, § 3390, subd. (3).) Sierra’s position is that it cannot legally perform the required work, since it does not have the appropriate license.
The trial court’s order provides that Sierra must complete its obligations under the various agreements with Kraft, which includes conveying Lot 91 to Kraft and completing the rough grading and erosion control plan. There is nothing indicating that Sierra must personally complete the rough grading and erosion control plan. In other words, there is nothing indicating that Sierra would be disobeying the trial court’s order if it were to employ a properly licensed contractor to complete the work. Since the work could be completed by a contractor, we are not persuaded that the trial court ordered Sierra to perform acts that Sierra does not have the power to lawfully perform.
5. COMPLEX CONSTRUCTION
Sierra contends that the trial court erred by ordering specific performance because the construction is complex. Sierra asserts that only discrete, solitary transactions are subject to specific performance. We disagree.
Specific performance is typically not awarded when a contract stipulates “a succession of continuous acts which require protracted supervision and direction by the court with the exercise of special knowledge, skill and judgment by the parties performing the acts. [Citation.]” (Ellison, supra, 80 Cal.App.3d at p. 580.)
At trial, Mullen testified that the grading for Lot 91 was substantially complete, and that the following items needed to be completed: “some” concrete terrace drains, an asphalt driveway, and “some” landscaping. Since the work has been substantially completed, we are not persuaded that the performance of the contract will be so complex that the trial court’s order of specific performance constitutes an abuse of discretion. (See Bakersfield Country Club v. Pacific Water Co. (1961) 192 Cal.App.2d 528, 539 [specific performance properly awarded because installation of pipelines will not require great deal of time to complete].)
We find support for our conclusion in Ellison. In Ellison, the appellate court concluded that dredging a navigation and drainage channel was not a complex act that would be burdensome to the trial court to supervise. (Ellison, supra, 80 Cal.App.3d at p. 581.) The reviewing court noted that complex contracts involved the development or operation of railroads, mines, oil fields, or citrus groves. The appellate court reasoned that the dredging of a navigation and drainage channel paled in comparison to the complex operation agreements. (Ibid.) We conclude that the instant contract is similarly simple when compared to a development or operation agreement, because the instant contract has already been substantially completed.
Sierra instructs this court to speculate about what may happen if Kraft objects to Sierra’s performance of the contract. Sierra argues that the trial court is “ill-equipped” to monitor the performance of a construction contract. We are not persuaded that the trial court’s judgment amounts to an abuse of discretion based upon Sierra’s invitation to speculate. (See People v. Ayala (2000) 24 Cal.4th 243, 265 [speculation will not support reversal of a judgment].)
6. CONCLUSION
In sum, the trial court did not abuse its discretion by awarding specific performance.
B. CROSS-APPEAL
On cross-appeal, Kraft contends that the trial court erred by granting Sierra’s motion for a nonsuit on the count alleging that Sierra must disgorge its profits because Sierra was an unlicensed contractor. (Bus. & Prof. Code, § 7031, subd. (b). We disagree.
All further statutory references will be to the Business and Professions Code, unless otherwise indicated.
“On review of a judgment of nonsuit, as here, we must view the facts in the light most favorable to the plaintiff. ‘[C]ourts traditionally have taken a very restrictive view of the circumstances under which nonsuit is proper. The rule is that a trial court may not grant a defendant’s motion for nonsuit if plaintiff’s evidence would support a jury verdict in plaintiff’s favor. [Citations.] [¶] In determining whether plaintiff’s evidence is sufficient, the court may not weigh the evidence or consider the credibility of witnesses. Instead, the evidence most favorable to plaintiff must be accepted as true and conflicting evidence must be disregarded. The court must give “to the plaintiff[’s] evidence all the value to which it is legally entitled, ... indulging every legitimate inference which may be drawn from the evidence in plaintiff[’s] favor....”’ [Citation.]” (Castaneda v. Olsher (2007) 41 Cal.4th 1205, 1214.)
Kraft’s cause of action was based upon section 7031, subdivision (b), which provides: “[A] person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract.”
Kraft’s case is problematic in two respects. First, the general contractor on the project was Capital, not Sierra. Kraft was not a party to the contract with Capital. Accordingly, it does not appear that Kraft qualifies as “a person who utilize[d] the services” because Kraft was not a party to the construction agreement. Second, to the extent it can be argued that Sierra and Kraft had a construction agreement, Sierra falls within the law’s landowner exemption. Section 7044, subdivision (a)(2) provides that the disgorgement rule regarding unlicensed contractors (§ 7031) will not apply if an owner builds or improves a structure on his property provided that (1) “The owner directly contracts with licensees who are duly licensed to contract for the work of the respective trades involved in completing the project”; and (2) “For projects involving single-family residential structures, no more than four of these structures are intended or offered for sale in a calendar year. [However, t]his subparagraph [does] not apply if the owner contracts with a general contractor for the construction.”
At the time the work was done on Lot 91, Sierra or Peak was the owner of the lot. Peak contracted with Capital to be the general contractor for the construction work. Capital holds a class “B” general building license. (§ 7057, subd. (a).) Capital entered into subcontracts for the grading and earthwork, because that type of work requires a class “A” contractor’s license (§ 7056). Accordingly, it appears from the record that Sierra, as the owner, contracted with a duly licensed general contractor for the construction, who worked with a duly licensed subcontractor. As a result, the owner exception applies to the instant case. Based upon the foregoing two issues, we conclude that the trial court did not err by granting Sierra’s motion for nonsuit on the unlicensed contractor (§ 7031) cause of action.
DISPOSITION
On the appeal and cross-appeal, the judgment is affirmed. The parties are to bear their own costs on appeal.
We concur: HOLLENHORST Acting P. J., CODRINGTON J.