Motion_re_deposit_funds

Motion

Cal. Super. - 2nd Dist.April 5, 2018

Electronically FILED by Superior Court of California, County of Los Angeles on 12/14/2018 01:07 PM Sherri R. Carter, Executive Officer/Clerk of Court, by J . Alexander,Deputy Clerk ap Oo 0 0 OO Wn 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Christian J. Gascou (SBN 209957) Ronald W. Hopkins (SBN 100895) Gascou Hopkins LLP 9696 Culver Blvd Suite 302 Culver City CA 90232 Phone: (310) 785-9116 Fax: (310) 785-9149 Attorneys for Plaintiff SureTec Indemnity Company SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES SURETEC INDEMNITY COMPANY, a Case No.: 18STLC05483 California corporation, MOTION TO DEPOSIT FUNDS, TO a DISCHARGE BOND NO. 5141801, FOR A. Plaintiff, RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] VS. RONALD FRICKE, an individual; NICOLE FRICKE, an individual; FRANK LUO, an individual; FAY LUO, an individual; CREDIBLE CONSTRUCTION, INC., a California corporation; and DOES 1 through 50, inclusive, Hearing Date: January 16, 2019 Time: 8:30 a.m. Dept: 94 Reservation No.: 181127368762 N r N r N e N e N e a N e N e a Defendants. (Related Cases: BC684322 and SC129306) MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND FOR ATTORNEY FEES AND COSTS SureTec Indemnity Company (“SureTec”) through its counsel, hereby applies for an order (1) to deposit all remaining bond funds from Contractor's License Bond No. 5141801 naming Credible Construction Inc. as principal (“the Bond”) with the Clerk of the Court; (2) to be discharged from all liability to all parties in this action, and to any other claimant with reference to Bond No. 5141801 issued on behalf of Credible Construction Inc.; (3) that all parties to this action are hereby restrained from instituting or further prosecuting any other proceeding in any other court in the State of California, or any other Jurisdiction, affecting the rights and obligations -1- MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] w o NO 0 ON a wn nN 10 1 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 between the parties to this interpleader — specifically, Los Angeles Superior Court Case Nos. BC684322 and SC129306; (4) that SureTec be awarded its reasonable attorney’s fees and court costs as allowance for its expenses incurred in this proceeding by filing of its Complaint in Interpleader and in preserving the penalty of said bond as permitted by CCP §386.6; and (5) that the remainder of the proceeds pending the outcome of this litigation, be disbursed upon further order and at the direction of this Court. | POINTS AND AUTHORITIES SureTec issued a Contractor’s License Bond No. 5141801 with Credible Construction Inc. as principal (“the Bond”). The penal sum of the Bond is $1 5,000. Under California law, SureTec’s liability is limited in the aggregate to the penal sum of its bond, irrespective of the number of claims brought against the bond. See, Cal. Civ. Proc. Code §996.470(a). Valid claims which exceed the penal sum of the bond are paid on a pro-rata basis. Three claimants made claims against the $15,000 Bond - (1) Frank and F ay Luo (the Luos or Luo); (2) Ronald and Nicole Fricke (the Frickes or F ricke); and (3) Lincoln Chayes (Chayes). The Frickes filed a lawsuit (LASC Case No. BC684322) (“Fricke Action”) in late 2017 naming SureTec and seeking the full $15,000 penal sum of the bond (Fricke Complaint, Third Cause of Action, 41). After answering the Fricke lawsuit, counsel for SureTec was made aware of the Luo claim. The Luo’s made a claim to SureTec totaling $436,751.23. Therefore, on April 35,2018, SureTec filed this complaint for (1) Interpleader (2) Breach of Indemnity Agreement; and (3) Reimbursement — LASC Case No. 18STLC05483 (“the Interpleader Action”). Counsel for the Frickes was advised of the filing of the Interpleader Action in April 2018, and SureTec repeatedly requested that counsel for the Frickes agree to accept service of process. No response was made to these requests. SureTec ultimately served Nicole Fricke on June 26, 2018 through its process server. Ronald Fricke dodged service of the Interpleader Action. After the filing of the Interpleader Action, SureTec was sued in May 2018 on the same license bond by homeowner Lincoln Chayes in LASC Case No. SC129306 (“the Chayes Action”). Like Fricke, Chayes sued SureTec for “[t]he full annual penal sum of the Bond; or ... [s]uch penal oF MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] Oo 0 9 On 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 sum as is available on the Bond...”. The Chayes’ and the Fricke’s each claimed the full $15,000 penal sum and the Luos claim nearly 30-times the penal sum of the Bond. Chayes was added as DOE 1 to the Interpleader Action June 13, 2018. Also in June 2018, the attorney for Chayes indicated that Chayes would take part in the Interpleader Action and he would “either dismiss Suretec without prejudice or seek a stay as to SureTec in [the Chayes Action]”. He further indicated that SureTec would not be required to answer the Chayes action because the right to the limited bond funds will be litigated in the interpleader. However. Chayes instead continued to prosecute the Chayes Action against SureTec and refused to participate in the Interpleader Action — as late as October 23, 2018, Chayes still had not answered the Interpleader. On or about July 13, 2018 — and still without filing an answer by Nicole Fricke who's answer was past due, or accepting service on behalf of Ronald — the Frickes served a summary adjudication motion against SureTec in the Fricke Action stating: “Judgment should be granted in favor of the Frickes’ regarding the fifth cause of action for violation of Business and Professions Code Section 7071.5 against Defendant Suretec Indemnity Company." In the body of the motion, counsel for Fricke argued “[t]he Fricks are entitled to recover the $15,000 bond for Construction Co., currently being held by Defendant Suretec, pursuant to Business and Professions Code Section 7071.5.” Hearing was set for October 1, 2018. In light of the Interpleader Action and the competing claims to the limited $15,000 in Bond funds, SureTec proposed a stipulation that the Frickes withdraw the summary adjudication motion without prejudice as to SureTec only. Counsel for the Frickes indicated on Friday, September 14, 2018 that his clients will not agree to withdraw the motion. Therefore, to preserve the penal sum of the Bond for all claimants, SureTec was forced to prepare an opposition to the summary adjudication motion of Fricke. The opposition was due Monday, September 17,2018. SureTec filed its opposition, declarations, RFJN and response to separate statement in support thereof on September 17, 2018. SureTec incurred approximately $4,403.24 in attorney fees and costs preparing an opposition to the Fricke summary adjudication motion. The Frickes still didn’t respond to the Interpleader Action. On August 29, 2018, counsel for the Frickes indicated that he would be filing a response for both Frickes but requested an - 8. MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] ES N Oo 0 9 O N Wn 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 extension to respond — which was granted — to September 17, 2018. A response was not filed, however, until September 27, 2018 — roughly five months after Frickes attorney was made aware of the interpleader. Meanwhile, hearing on the summary adjudication motion and the Final Status Conference in the Fricke Action were continued to permit the parties to mediate the dispute. SureTec again advised that the claim should be handled through the Interpleader Action; and that it would not be participating in the mediation because it would further deplete limited Bond funds. Credible apparently settled with Fricke at mediation. SureTec is unable to determine the validity of the claims and rights to the penal sum of the Bond or the validity of the bond principal’s defenses. SureTec may be exposed to multiple liabilities if it delivers the penal sum of the Bond to any of the claimants. Moreover, SureTec will further deplete any available Bond funds if it continues to participate in this matter because its costs and attorney fees are recoverable from the Bond under Cal. Code Civil Procedure §386.6. SureTec is entitled to that award of attorneys’ fees and expenses pertaining to this interpleader under Code Civ. Proc. §386.6. Neither the Chayes nor the Frickes agreed to pursue their claims through this interpleader in lieu of prosecuting their lawsuits - Fricke v. Arbib, et al, LASC Case No. BC684322 and Chayes v. Arbib et al, LASC Case No. SC129306. SureTec was therefore unreasonably forced to litigate in two lawsuits in addition to this Interpleader Action. In the Fricke case in particular, Sure Tec had to oppose a motion for summary adjudication to preserve the bond funds for other claimants which further increased costs. Counsel for the Fricke’s refused a reasonable request to stipulate to withdraw the summary adjudication motion as to SureTec only, thereby necessitating the preparation of an opposition to preserve the Bond for all claimants. SureTec has consistently maintained that the interpleader is the proper forum for resolving claims against the bond. In litigating three lawsuits including the Interpleader Action to preserve the Bond for all claimants, including the Luos who did not file a lawsuit, SureTec has incurred fees of at least -4- MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] Oo 0 9 ON wn nN 10 11 12 13 14 13 16 17 18 19 20 21 22 23 24 23 26 27 28 $9,873.21." Applying this Court’s Local Rule 3.214 would reduce attorney fees to $746.48. Costs associated with the interpleader total $2,323.71. Therefore, SureTec maintains that the total amount recoverable from the $15,000 bond under §386.6 is $3,070.19. Further, SureTec is informed and believes that the Fricke case (Fricke v. Arbib, et al, LASC Case No. BC684322) was settled following mediation and principal agreed to make payment to Fricke believing that such payment resolved Fricke’s bond claim. Fricke’s counsel disagrees. SureTec is unable to resolve the dispute. Therefore, to avoid further depleting the available Bond funds, SureTec applies for an order (1) to deposit all remaining funds from Contractors License Bond No. 5 141801 with the Clerk of the Court; (2) to be discharged from all liability in this action, and to any other claimant with reference to Bond No. 5141801 issued on behalf of Credible Construction Inc. pursuant to Cal. Code Civil Procedure §386, Cantu v. Resolution Trust Corp., 4 CA4th 857, 874 (1992) and City of Morgan Hill v. Brown, 71 CA 4% 1114, 1122 (1999); (3) that all parties to this action are hereby restrained from instituting or further prosecuting any other proceeding in any other court in the State of California, or any other jurisdiction, affecting the rights and obligations between the parties to this interpleader;? (4) that SureTec Indemnity Company be awarded its reasonable attorney’s fees and court costs of at least $3,070.19 as allowance for its expenses incurred in this proceeding by filing of its Complaint in Interpleader and in preserving the penalty of said bond for all claimants on an equal basis as permitted by Cal. Code Civil Procedure §386.6; and (5) that the remainder of the bond proceeds pending the outcome of this litigation, be disbursed upon further order and at the direction of this Court. DATE: December 14, 2018 Respectfully Submitted by, GASCOU HOP P Attorri€ys for SureTec Indemnity Company ! This amount does not include invoices for November or December expenses. * Specifically, Fricke v. Arbib, et al, LASC Case No. BC684322 and Chayes v. Arbib et al, LASC Case No. SC129306. -5- MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] Oo 0 9 Oo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 7 28 DECLARATION OF CHRISTIAN J. GASCOU In support of this motion, I, Christian J. Gascou can state the following based upon personal knowledge. Iam an attorney at law licensed to practice in the State of California and a counsel of record for Sure Tec Indemnity Company in this action. This declaration is offered in support of SureTec’s motion to deposit bond funds and other relief, If called upon to testify in this action, I could and would state the following: a. SureTec issued a Contractor’s License Bond No. 5141801 with Credible Construction Inc. as principal (“the Bond”). A true and correct copy of the Bond is attached hereto as Exh. 1. b. The penal sum of the Bond is $15,000. Three claimants made claims against the $15,000 Bond - (1) Frank and Fay Luo (the Luos or Luo); (2) Ronald and Nicole Fricke (the Frickes or Fricke); and (3) Lincoln Chayes (Chayes). ¢. Claimants’ demands are in excess of the penal sum. The Frickes filed a lawsuit (LASC Case No. BC684322) in late 2017 naming SureTec and seeking the full $15,000 penal sum of the bond (Fricke Complaint, Third Cause of Action, 41). d. After answering the Fricke lawsuit, I was made aware of the Luo claim by SureTec’s claims department. The Luo’s claimed $436,751.23. On April 5, 2018, we were instructed to file this complaint for (1) Interpleader (2) Breach of Indemnity Agreement; and 3) Reimbursement — LASC Case No. 18STLC05483 (“the Interpleader Action”). e. My firm advised counsel for the Frickes of the filing of the Interpleader Action, and requested that counsel for the Frickes agree to accept service of process. No response was made to this request. We served Nicole Fricke on June 26, 2018, but our process servers were not able to serve Ronald Fricke despite repeated attempts. A true and correct copy of the Proof of Service on Nicole Fricke is attached hereto as Exhibit 2. f.- After the filing of the Interpleader Action, SureTec was sued on the same license bond by homeowner Lincoln Chayes—in LASC Case No. SC129306 (“the Chayes Action”). A true and correct copy of the complaint in the Chayes Action (face page and sixth bond count only) is attached hereto as Exhibit 3. Mr. Chayes also seeks recovery against the same $15,000 bond. San MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF ‘CHRISTIAN J. GASCOU; ORDER [PROPOSED] 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 26 27 28 SureTec thereafter added Mr. Chayes as Doe 1 to the Interpleader Action. A true and correct copy of the Doe amendment adding Mr. Chayes is attached hereto as Exhibit 4. Upon being advised of the Interpleader Action and accepting service, Mr. Chayes’ counsel agreed that he will not pursue SureTec in the Chayes Action, but will pursue a pro rata share of recovery of the bond funds in the Interpleader Action. He did not. An answer was not filed until October 26,2018. g. On or about July 13, 2018 — and still without filing an answer by Nicole Fricke who's answer was past due, or accepting service on behalf of Ronald — the Frickes served a summary adjudication motion against SureTec seeking: “Judgment should be granted in favor of the Frickes’ regarding the fifth cause of action for violation of Business and Professions Code Section 7071.5 against Defendant Suretec Indemnity Company." In the body of the motion, counsel for Fricke argued “[t]he Fricks are entitled to recover the $15 ,000 bond for Construction Co., currently being held by Defendant Suretec, pursuant to Business and Professions Code Section 7071.5.” Hearing was set for October 1, 2018. A true and correct copy of the Fricke Summary Adjudication Motion is attached hereto as Exhibit 5. h. In light of the Interpleader Action and the competing claimants to the limited $15,000 in bond funds, counsel for SureTec proposed a stipulation that the Frickes withdraw this Summary Adjudication motion without prejudice as to Sure Tec only. A true and correct copy of the proposed Stipulation tendered to counsel for the Frickes is attached hereto as Exhibit 6. Counsel for the Frickes indicated that his clients will not agree to withdraw the motion on the Friday before the Monday that the Opposition was due. i. SureTec is informed and believes that the Fricke case (Fricke v. Arbib, et al, LASC Case No. BC684322) was settled following mediation and principal agreed to make payment to Fricke believing that such payment resolved Fricke’s bond claim. Fricke’s counsel disagrees. A true and correct copy of a November 8, 2018 email chain indicating the dispute is attached hereto as Exhibit 7. J. SureTec cannot resolve the conflicting demands, is unable to determine the validity of the claims or rights to the penal sum of the Bond, or the bond principal’s defenses. 1 MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] B L OO 0 0 oO Wn 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 k. SureTec will further deplete any available Bond funds if ijt continues to participate in this matter because its costs and attorney fees are recoverable from the Bond under Cal. Code Civil Procedure §386.6. L SureTec is entitled to that award of attorneys’ fees and expenses pertaining to this interpleader under Code Civ. Proc. §386.6. m. Neither the Chayes nor the Frickes timely pursued their claims through this interpleader in lieu of prosecuting their lawsuits - Fricke v. Arbib, et al, LASC Case No. BC684322 and Chayes v. Arbib et al, LASC Case No. SC129306. SureTec was therefore unreasonably forced to litigate in both cases in addition to this Interpleader Action. In the Fricke case in particular, SureTec had to oppose a motion for summary adjudication to preserve the bond funds for other claimants which further increased costs. SureTec has consistently maintained that the interpleader is the proper forum for resolving claims against the bond. Attached hereto as Exhibit 8 is a true and correct copy of an email to all counsel reiterating this position and advising that we will not participate in mediation of the Fricke lawsuit. n. True and correct copies of Gascou Hopkins LLP’s invoices are attached hereto collectively as Exhibit 9. SureTec has incurred fees and costs of at least $9,873.21. 0. Applying this Court’s Local Rule 3.214 would reduce attorney fees to $746.48. Costs associated with the interpleader total $2,323.71. Therefore, the total amount recoverable from the $15,000 bond under §386.6 is $3,070.19. I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct to the best of my knowledge. DATE: December 14, 2018 GASCOU HOPKINS LLP TE Chrfstian J. Géscou -8- MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] R N Oo n n Oo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 59 28 [PROPOSED] ORDER The motion of SureTec Indemnity Company for an order to direct deposit was heard by the Court on January 16, 2019. WHEREFORE, upon proof being made to the satisfaction of the Court and good cause appearing therefore: IT IS HEREBY ORDERED THAT: 1. SureTec Indemnity Company be discharged from all liability to all parties in this action, and to any other claimant with reference to Bond No. 5141801 issued on behalf of Credible Construction Inc. as principal, by depositing $15,000 with the Clerk of this Court. 2. SureTec Indemnity Company be dismissed with prejudice from Los Angeles Superior Court Case No. 18STLC05483. A: SureTec Indemnity Company’s Complaint for Interpleader is dismissed without prejudice. 4, All parties to this action are hereby restrained from instituting or further prosecuting any other proceeding in any other court in the State of California, or any other jurisdiction, affecting the rights and obligations between the parties to this interpleader, specifically including, but not limited to, the following actions: Fricke v. Arbib, et al, LASC Case No. BC684322 and Chayes v. Arbib et al, LASC Case No. SC129306. 5. SureTec Indemnity Company is dismissed with prejudice from Fricke v. Arbib, et al, LASC Case No. BC684322 and Chayes v. Arbib et al, LASC Case No. SC129306. 6. SureTec Indemnity Company be awarded its reasonable attorney’s fees and court costs in the sum of $3,070.19 as allowance for its expenses as permitted by CCP §386.6, and that the clerk issue check payable to “SureTec Indemnity Company” for $3,070.19 from the deposited bond proceeds 4 The remainder of the proceeds ($11,929.81) pending the outcome of this litigation, to be disbursed upon further order and at the direction of this Court. -9. MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] 0 NN ON \O 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Honorable Judge of Los Angeles County Superior Court - 10 + MOTION TO DEPOSIT FUNDS, TO DISCHARGE, FOR A RESTRAINING ORDER, AND ATTORNEY FEES AND COSTS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF CHRISTIAN J. GASCOU; ORDER [PROPOSED] EXHIBIT 1 THIS BOND SHALL BE FILED WITH THE REGISTRAR OF CONTRACTORS SURETY CODE HO9 STATE OF CALIFORNIA, : CONTRACTORS STATE LICENSE BOARD BORN, ABO LICENSE NO, 972311 Ee —— 1 Contractor's Bond oR BUSINESS AND PROFESSIONS CODE SECTIONS 7074.5-7071.449) APP. FEE NO. The premium on this bond is $938.00 for the term 06/25/2012 through 06/24/2015 KNOW ALL BY THESE PR ESENTS: That CREDIBLE CONSTRUCTION INC BUSINESS NAME SHOWN ON APPLICATION OR LICENSE whose address for service is 1080 SOUTH LA CIENEGA BLVD # 310 LOS ANGELES, CA 90035 STREETADDRESS CITY STATE ZIPCODE as Principal, and SureTec Insurance Company NAME OF SURETY a corporation organized under the laws of Texas and authorized to transact a general surety business in the State of California, as Surety, are held and firmly bound unto the State of California, for the penal sum of Twelve Thousand Five Hundred Dollars ($12,500) for the payment of which well and truly to be made we bind ourselves, our heirs, administrators, successors and assigns, jointly and severally, firmly by these presents. WHEREAS, The provisions of Sections 7071.6 and 7071 8, Business and Frofessions Code, require that the Principal file or have on file with the Registrar a bond issued by an admitted surety in the sum of $12,500 and this bond is executed and tendered in accordance therewith, NOW THEREFORE, The conditions of the foregoing obligation are that if the Principal shall comply with and be subject to the provisions of Division 3, Chapter 9 (commencing with Section 7000) of the Business and Professions Code, then this obligation shall be null and void; otherwise to remain in full force and effect. PROVIDED HOWEVER, This bond is issued subject to the following express conditions: date of license of active licen see was inactivated, canceled or revoked, whichever occurs first, except provided further that a claim for fringe benefits shall be brought within six (6) months after the date the fringe benefit delinquencies were discovered, and any civil action thereon shall be fied within two (2) years after the date the fringe benefit contributions were due. 4. This bond is executed by the Surety to comply with the provisions of Division 3, Chapter 9, (commencing with Section 7000) of the Business and Professions Code and of Chapter 2, Title 14, Part 2 {commencing with Section 995.010) ofthe Code of Civ} Procedure and said bond shall be subject to all of the terms and provisions thereof, : 5. This bond to become effective 06/25/2012 DATE SureTec Insurance Company 1330 Post Oak Bivd.. Suite 1100 Houston, TX 77056 NAME OF SURETY ADDRESS FOR SERVICE | cerdify (or declare) under penalty of perjury under the laws ofthe State of California that | have executed the foregoing bond under an unrevoked power of attomey. Executed in Reseda, CA on 06/15/2012 » under the laws of the State of California, CITY AND STATE DATE Certificate of Authority # 08138 Signature of Attorney-in-Fact Printed or Typed Name of Attorney-in-Fact Mike Kahen Address of Attorney-in-Fact 6650 Reseda Blvd. Suite 108 Reseda, CA Te 2 VT NESRdg, | : Telephone Number of Att in-Fact_800-801-9570 PL Lm elephone Number omey-in-Fac 80 -80 0 oi tg pn EXHIBIT 2 P0S-010 ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State Bar number, ang address); FOR COURT USE ONLY Christian Gascou, 200957 Gascou Hopkins LLP 9696 Culver Blvd Suite 302 Culver City, CA 90232 TELEPHONE No; (310)785-9116 Ext 226 ATTORNEY FOR vemep: Plaintiff SUPERIOR COURT OF CALIFORNIA, COUNTY OF Superior Court of California, Los Angeles County 111 N. Hill Street Los Angeles, CA 90012-3117 PLAINTIFF/PETITIONER: Suretec Indemnity Company CASE NUMBER: 18STLC05483 DEFENDANT/RESPONDENT: Ronald Fricke, et al, Ref. No, or File No,: PROOF OF SERVICE OF SUMMONS 641-192 1. Atthe time of service | was a citizen of the United States, at least 18 years of age and not g party to this action, B Y F A X I Case Cover Sheet, Civil Case Cover Sheet, Standing Order, 2. | served copies of: Summons, Addendum to Civi General Order, Notice of Case Assignment, Complaint, ADR Packet 8. a. Party served: NICOLE FRICKE, an individual b. Person Served: party in item 3a 4. Address where the party was serveg: 967 Crane Blvd, Los Angeles, CA 90065 a. by personal service. | personally delivered the documents listed in item 2 to the party or person authorized to receive service of process for the party (1) on (date): 06/26/2018 (at (time): 7:38PM 6. The "Notice to the Person Served" {on the summons) was completed as follows: a. as an individual defendant, 7. Person who served papers a. Name; Pablo Lopez b. Address; One Legal « 194-Marin - 504 Redwood Blvd #223 Novato, CA 94947 ¢. Telephone number: 415-491-0606 d. The fee for service was: $ 75.00 e lam: (3) registered California process server, (i) Employee or independent contractor, (i) Registration No.: 5993 (iii) County: Los Angeles 8. | declare under penalty of perjury under the laws of the United States of America and the State of California that the foregoing is true and correct, Date: 06/29/2018 Rev. Jan 1, 2007} Fa fy Pablo Lopez {NAME OF PERSON WHO SERVED PAPERS) (SIGNATURE) Form Adapted for Mandatory Use Code of Civil Przoedure, § 417.90 Judicial Council of California POS-010 on 5 PROOF OF SERVICE OF SUMMONS OL# 12076334 EXHIBIT 3 13 C O ® 9 a w o a o w 10 11 12 13 14 15 16 17 18 19 20 2] 22 23 24 25 © 26 27 1 28 LAW OFFICES OF ROBERT P. BAKER CoONEORIE ROBERT P. BAKER (SBN 075748) Supers aNAL [3 COPY 401 WILSHIRE BOULEVARD OUTY of Log ppciioinia 2TH FLOOR SANTA MONICA, CA 90401 MAY 22 2013 TEL 424-252-4731 Sheri p, BKO@YAHOO.COM Carte, Exacuive Officers |. WWW.BAKERJUSTICE.COM SV: Tom G. Hopp Depuiy COUNSEL FOR PLAINTIFF, ~ CASE MANAGEMENT CONFERENCE LINCOLN CHAYES Jute yep, H-MHT Sapo * SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES, WEST DISTRICT LINCOLN CHAYES, an individual, ) Case No. SC1293¢6 Plaintiffs, COMPLAINT FOR: Vv. , ) 1. Breach of Contract: AV Sa da A SHA AR an indivi 3 . . CONSTRUCTION, INC. a Culfornia 3 2. Negligence; corporation: ALD ARB an i indvidaay, SURETEC INDEMNITY ) 3- Promissory Estoppel; COMPANY, a California corporation; ) Co. and DOES 1-50, ] 4. Rescission; Defendants ) 5. Fraud and Deceit; and So w t ao a ? / 6. Claim on Licensing Bond Plaintiff, Lincoln Chayes, alleges as follows for his Complaint: ALLEGATIONS COMMON TO ALL CAUSES OF ACTION Parties, Jurisdiction and Venue Plaintiff 1. Plaintiff, Lincoln Chayes (“Plaintiff’or “Chayes”), is an individual] who is, and at all relevant times was, a resident Los Angeles County and domiciled at 3033 Margaret Lane, IT COMPLAINT E e I E E E E T SE 10 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 50. Chayes has also suffered emotional distress damages suffered as the result of having to deal with: 1) the Residence in a state of upheaval for over 9 months with no end in sight rather than the 3 months promised in the Contract due to the incompetence of Shawn and Credible and their inability to do the work and Aldo’s failure to attend to the job and supervise the workers which he is obligated to do as the qualifying individual of Credible, and yet with no progress toward having a renovated Residence; 2) the fact that Chayes devoted two sabbaticals to the Project, believing that he would have a completely renovated Residence at the end of the process. Instead he has no home, he is at the beginning of the process and it will be many years before he can take another sabbatical to devote to professional endeavors or travel. This is a theft of his quality of life and Plaintiff should be compensated according to proof at trial. 51. In doing the things herein alleged, Shawn, Credible and Aldo acted with fraud, malice, and conscious disregard for the rights of Plaintiff and always intended to take Plaintiffs money without performing the obligations of Credible under the Contract. Accordingly, Plaintiff is entitled to punitive and exemplary damages according to proof at trial. Sixth Cause of Action by Plaintiff Against Suretec on the Licensing Bond of Credible 52. Plaintiff incorporates, as though fully set forth herein, paragraphs 1 through 51 of this Complaint. 53. Credible has violated the following provisions of the State Contractors’ Licensing Law in connection with its work at the Residence: a) Section 71009- Departure from accepted trade standards and/or plans and specifications. A willful departure in any material respect from either accepted trade standards or plans and specifications is generally a cause for disciplinary action. If such a violation is | Z8T COMPLAINT W o a a a Ww p o 10 11 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 proven, it is also cause for a claim on the contractor’s statutory licensing bond. b) Sec. 7107 Abandonment of Contract. Abandonment without legal excuse, of 2 construction project constitutes cause for disciplinary action. If such a violation is proven, it is also cause for a claim on the contractor's statutory licensing bond. As alleged above, Credible violated both trade standards and the specifications for the Project which are cause for disciplinary action under Sec 7109 and diverted funds from the project which is grounds for discipline. Credible also failed to pay the window subcontractor within seven days in violation of Sec 7108.5 resulting in a lien. Everything that needed to pass inspection failed inspection: structural, roof, electrical, plumbing, When Plaintiff refused to pay yet another $36,200 which could not be justified by the work done to date, or to provide a schedule and guarantee of no further spurious upcharges, Shawn refused to continue to work. After the work had been essentially idle for 2 weeks. Plaintiff deemed the project to have been abandoned by Credible. Credible was asked to remove the scaffolding and a follow on contractor was retained to clean up some of the mess and perform an audit with a City inspector. 54. As the result of the foregoing violations of the California State Contractors’ Licensing Law, Plaintiffs have been injured in an amount not less than $358,941.91. They therefore make claim on statutory licensing bond in the name of Credible # 5141801 in the full penal sum, 55. Plaintiffs reserve the right to amend this Complaint to seek other and further relief as may be appropriate and authorized by the Bond after reviewing the terms of the Bond. WHEREFORE Plaintiff prays for judgment as follows: Against Credible, Shawn, Aldo, and Does 1-50: 1) Damages according to proof at trial; ZY COMPLAINT we «a 2) Rescission of the contract, restitution of all payments under the Contract and consequential damages according to proof at trial; 3) Restitution of overpayments on the Contract; 4) Punitive damages according to proof at trial: 5) Interest at the legal rate; 6) Fees and costs of suit; 7) Such other and further relief as the court deems just. Against Suretec; 1) The full annual penal sum of the Bond; or 2) Such penal sum as is available on the Bond; 3) Fees and costs of suit; 4) Such other and further relief as the court deems just; and 5) Such other and further relief as may be just after a review of the Bond, related correspondence and circumstances. Dated: LAW OFFICES OF ROBERT P. BAKER By. SU COMPLAINT EXHIBIT 4 NAME, AUBRESS, AND TELEPHONE NUMBER OF Christian J. Gascou Gascou Hopkins Lup 9696 Culver Blvd Suite 302 Culver City CA 90232 ATTORNEY ORPARTY WITHOUT ATTORNEY: STATE BAR NUMBER 209957 ATTORNEY FOR (Name) Plaintiff @ Reserved for Cloris File Stamp FILED Superior Court of California County of Los Angeles SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES JUN 138 2018 COURTHOUSE ADDRESS: | 111 North Hill Street, Los Angeles CA 90012 " PLAINTIFF i Sherti R. Carter, Exaeutive Officer/Clérk SureTec Indemnity Company By . Deputy DEFENDANT: Jaimé Alevanriar |Ronald Fricke, et al, B AMENDMENT TO COMPLAINT CASE NUMBER: (Fictitious /incorrect Name) 185T1C054483 KI FICTITIOUS NAME (No order required) Upon the filing of the complaint, the plaintiff, being designated the defendant in the complaint by the fictitious name of FICTITIOUS NAME [pox 1 ignorant of the true name of the defendant and having and having discovered the true name of the defendant to be: TRUE NAME Lincoln Chayes, an individual amends the complaint by Substituting DATE TYPE OR BRINT NAMI 6/13/18 the true name for the fictitious name wherever | ~] SIGNATURE GF Christian J. @ascou g Lappe 3; [J INCORRECT NAME (Order required) The plaintiff, having designated a defendant in the complaint by the incorrect name of: | INCORRECT NAME L u and having discovered the true name of the defendant to be; fe ORDER THE COURT ORDERS the amendment approved and filed. Dated LACHV 105 (Rev. 01/07) AMENDMENT TO COMPLAINT LASC Approved 03-04 fl By) te (Fictitious / Incorrect Name) Judicial Officer Cade Giv. Proc., §§ 471.5, 472, 473, 474 EXHIBIT 5 Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 California Corporation, SURETEC FELTON T. NEWELL - State Bar No. 201078 fnewell@glaserweil.com GLASER WEIL FINK HOWARD AVCHEN & SHAPIRO LLP 10250 Constellation Boulevard, 19th Floor Los Angeles, California 90067 Telephone: (310) 553-3000 Facsimile: (310) 556-2920 Attorneys for Plaintiffs RONALD FRICKE AND NICOLE FRICKE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES, CENTRAL DISTRICT RONALD FRICKE and NICOLE FRICKE, individuals, Plaintiffs, Vv. SHAUL ARBIB a/k/a SHAWN ARVIV a/k/a SHAUL SHAWN ARBIB, an individual, CREDIBLE CONSTRUCTION, INC., a INDEMNITY COMPANY, a California Corporation, and DOES 1-10, Defendants. Case No. BC684322 Unlimited Jurisdiction Assigned to the Honorable Michael Linfield Department: 34 PLAINTIFFS RONALD FRICKE AND NICOLE FRICKE’S MOTION FOR SUMMARY ADJUDICATION Date: Time: Dept: October 1, 2018 8:30 am. 34 Action Filed: November 20, 2017 Trial Date: November 13, 2018 Hearing Reservation LD. 180710329662 [Statement of Undisputed F acts, and Declarations in Support filed concurrently herewith] PLAINTIFFS RONALD AND NICOLE FRICKE’ S MOTION FOR SUMMARY ADJUDICATION Gl as er W ei l 10 11 12 13 14 15 16 17 18 19 20 21 22 28 24 25 26 27 28 1509689 TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on October 1, 2018, at 8:30 a.m., or as soon thereafter as the matter may be heard, in Department 34 of the Los Angeles Superior Court, located at 111 N. Hill Street, Los Angeles, California 90012, Plaintiffs Ronald and Nicole Fricke will, and hereby do, move for an order pursuant to Code of Civil Procedure 437c(f), adjudicating the following issues in favor of the Frickes and against defendants Credible Construction, Inc. and Suretec Indemnity Company and the final judgment in this action shall, in addition to any matter resolved at trial, reflect the following adjudicated issues: ISSUE NO. 1 Judgement should be granted in favor of the Frickes’ regarding the first cause of action for breach of contract against Defendant Credible Construction, Inc. ISSUE NO. 2 Judgement should be granted in favor of the Frickes’ regarding the fifth cause of action for violation of Business and Professions Code Section 7071.5 against Defendant Suretec Indemnity Company. This motion is based on this Notice of Motion and Motion, the attached Memorandum of Points and Authorities, the Declaration of Ronald Fricke, the Declaration of Frank McSwain and the Declaration of Socorro Coc Cubule, the Separate Statement of Undisputed Material Facts, and on such other evidence as may be presented at the hearing of this motion. DATED: July 11, 2018 GLASER WEIL FINK HOWARD AVCHEN & SHAPIRO LLP NT FELTON T. NEWELL Attorneys for Plaintiffs RONALD FRICKE AND NICOLE F RICKE 1 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er W ei l 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 TABLE OF CONTENTS Page MEMORANDUM OF POINTS AND AUTHORITIES .........ooccorrmrrsssoooooo 2 I. INTRODUCTION ..vvssussssssreesssesssssssssnsssssssssssesssssssossnssssisesssssssssesmsssmesesmese sso. 2 I. FACTS co t sss sss sss sssss sss snss oss sss sesso sesso. 3 A. The Frickes Purchase Their “Dream Home,” Enter into the Agreement with Defendants and Pay Defendants $125,416. ..ccoovvvvvemceeeeessoorsosoooo 3 B. Construction Co. Uses Unlicensed Contractors Who Perform Shoddy and Life-Threatening Work. ........cooouveeeeeceereeseseessssmssosesosesms sooo 4 C. Frank McSwain Begins Oversight of Fricke’s Home Remodeling Project for CONSUCHON COrrrrrnsvrccessenrsressssessssanseressssssssesssmseesessssssessoseoes eso. 6 D. The Frickes Hire Licensed Contractors to Repair Defendants’ Shoddy Work and to Complete the Remodeling i 8 E. Defendant Suretec Issues Construction Bond to Construction Co.......ccvuuernn... 9 HI. LEGAL STANDARD....ccucvvmsssmssmmrsssosssssssssssssinsssssemsoneessssmsomome sees. 9 IV. ARGUMENT coors cpessesimssssssss sso sassossssssssssmsssssssssssssssmesssese soso 10 A. There is No Factual Dispute that Construction Co. Breached the Agreement. ..... 10 B. Suretec Is Liable Up to the Amount of the Bond Under Business and Professions Code Section 7071.5. ......ccocoeeremevoreemmreosoooooo 12 V. CONCLUSION tesvrtsrsisnsssssssssssssssssesnsssss ass ssssssssesssssesmsssess sommes ess 13 i PLAINTIFFS RONALD AND NICOLE FRICKE’S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 TABLE OF AUTHORITIES Page STATE CASES Exxon Corp. v. Super. Ct. 51 Cal. App. 4th 1672 OT stresses esses ose 10 Lilienthal & Fowler v. Super. Ct. 12 Cal. App. 4th 1848 CL EE 10 Lunardi v. Great-West Life Assurance Co., 37 Cal. App. 4th 807 ULSI serssemssssstssmssssssesosis misao opens esses 10 Reichert v. General Ins. Co. , 68 Cal. 2d 822 (L968). cssesmsmeseessss sss esses. 10 Stratton v. First Nat. Life Ins. Co., 210 Cal. App. 3d 1071 (1989) rrr strstr sss sees. 10 STATE STATUTES ‘California Business and Professions Code | SOCHORTOGBEY costs sss tse... 7 California Code of Civil Procedure oH ATC tt sss ses 9 Seto ASTOC) 10 Soto ABTOO) cv 10 Sacto TOLLS coecei essiisunmrommniomn 12 Section 437¢, subd. OL) trrrsttemessrssssssmsmesessssse 10 ii PLAINTIFFS RONALD AND NICOLE FRICKE’S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 i 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 | MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION When Plaintiffs Ronald and Nicole Fricke purchased a house in the Mount Washington neighborhood of Los Angeles in April 2017, they were excited about the possibility of transforming the house into their dream home. When they hired remodeling contractor Shaul Arbib and his emma, Credible Construction, Inc. (“Construction Co.”), however, their home-owning experience turned into a nightmare. Among other things, Construction Co.: (1) performed shoddy unpermitted work that failed to meet applicable building codes and was life-threatening for the Frickes; (2) used unlicensed subcontractors to work on the Frickes’ home; and (3) failed to meet clear and unambiguous contractual deadlines. The contract Construction Co. drafted also provided for unlawful upfront payments for work to be completed. One of the unlicensed subcontractors told the Frickes that Mr. Arbib instructed him to do the work as cheap as possible because the Frickes were “kittens” who would not do anything about it. The Frickes filed this action against Construction Co. and Mr. Arbib to recover the damages they have suffered as a result of this nightmare. As there are no material issues of dispute regarding the elements of the Frickes’ breach of contract and Business and Professions Code Section 7071.5 claims, the Court should grant this Motion for Summary Adjudication as to those two causes of action. Construction Co. has breached its agreement with the Frickes by failing to adequately perform the contractual scope of work within the applicable deadline. The agreement identified specific tasks that Construction Co. was to perform, and required it to complete all work by October 16,2017. Pursuant to the terms of the agreement, the Frickes paid Construction Co. upfront payments of $125,416, out of the total contract price of $182,600. After Construction Co, performed shoddy unpermitted work, and failed to meet the critical completion deadline, the Frickes terminated the agreement, and hired new contractors to fix Construction Co.’s electrical, framing, air conditioning, and plumbing work. The Frickes® new contractors charged them more than $37,000 to fix Construction Co.’s faulty and life-threatening work, and identified the following significant defects and violations of city building codes in Construction Co.’s work, among many 2 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 1509689 others: faulty wiring that had caused several small fires, framing work that did not meet applicable code requirements, and pipes that would have dissolved within one year if they had not been replaced. The poor quality of the unpermitted work was not surprising as Construction Co. relied on iis work of unlicensed subcontractors, in violation of California law. Thus, Construction Co. breached the agreement with the Frickes. In addition, the uncontroverted evidence shows that, as a result of Construction Co’s use of unlicensed subcontractors, the Frickes are entitled to the full $15,000 surety bond that Construction Co.’s bond company Suretec Indemnity Company (“Suretec™) holds, pursuant to Business and Professions Code Section 7071.5. The Court should grant this motion in its entirety. TI. FACTS A. The Frickes Purchase Their “Dream Home,” Enter into the Agreement with Defendants and Pay Defendants $125,416. On April 24, 2017, plaintiffs Ronald and Nicole Fricke purchased their dream home, located at 567 Crane Boulevard in Los Angeles, California (the “Home™) (SUF § 1). The Frickes discussed the remodeling they wanted to do at their personal residence, researched home reconstruction companies, and ultimately decided to contact Mr. Arbib, owner of Construction Co. (SUF 12). Mr. Arbib serves as Chief Executive Officer and Secretary of Construction Co. (SUF § 3). After negotiating with Mr. Arbib, on June 14,2017, the Frickes entered into an agreement (the “Agreement™) with Construction Co., providing for the remodeling of the Home. (SUF 14). Mr. Arbib represented that all work would be performed by licensed contractors and that the work would satisfy state and local code requirements. (SUF 5). Defendants also represented that Construction Co. would only present change orders to the Frickes for work that was unforeseen and necessary. (SUF 9 6). But for these representations by Mr. Arbib and Construction Co., the Frickes would have hired a different construction company. (SUF § 7). The Agreement expressly provided that construction work was to commence on June 26, 2017 and that all work would be completed on or before October 16, 2017 for a total price of $182,600. (SUF 18). While Construction Co.’s form agreement contained language providing that the work would be “substantially completed approximately on ”, the parties agreed to cross out the word “approximately,” and to both 3 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 28 26 27 28 1509689 sign their initials next to this clarification, making it clear that the deadline for completion was final. (SUF 1 9). The Agreement Mr. Arbib drafted also provided for a schedule of up front payments by the Frickes as Construction Co. commenced various construction milestones, which is contrary to California law, which requires the completion of construction work prior to payment. (SUF 9 10). The Frickes satisfied their payment obligations under the Agreement by paying Construction Co.: $1,000 on June 16, 2017 (as an initial deposit), $54,780 on June 27, 2017 (upon commencement of the work), $38,720 on August 1, 2017 (when the skim coating work commenced), and $30,916 on October 13, 2017 (when the stucco work commenced), for a grand total of $125,416. (SUF 911). B. Construction Co. Uses Unlicensed Contractors Who Perform Shoddy and Life- ee QT O1S Who Zeriorm Shoddy and Life- Threatening Work. After June 26, 2017, Construction Co. and its subcontractors performed demolition work at the Home, as the Frickes expected. (SUF 12). Among the individual subcontractors who worked on the project were: Salvador Alonso of SI Construction, Jose Ochoa of NV Construction, and Estuardo Curiel. (SUF Y 13). None of these men or their respective entities hold an active license, according to the California State Licensing Board website? (SUF q 14). After this demolition work was completed, the pace of work slowed significantly and ultimately stopped altogether. (SUF q 15), When the Frickes contacted Mr. Arbib about the slow pace of work and the demolition debris that sat at the house for months, all Mr. Arbib offered was excuses. (SUF 916). Among the excuses was the canard that Construction Co.’s subcontractors could not complete their work on time because they were waiting for the Frickes’ independently hired contractors to complete their work. (SUF § 17). While the Frickes did follow Mr. Arbib’s recommendation to hire a separate - window installer to handle the replacement of windows?, none of this work impacted Construction I Skim coating is a texturing technique used to make a wall smooth. Skim coating gives a wall a plaster-like appearance. 2 While there are a few licensed Jose Ochoas, none are associated with NV Construction. Id 3 Mr. Arbib told the Frickes they would be better off using their own window subcontractor as the bids he submitted for the work were significantly higher. Id PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 Co.’s ability to complete its work on time. Jd. Moreover, Construction Co. first raised this unfounded concern with the Frickes after it missed its October 16, 2017 deadline. (SUF 918). While the Agreement described the work Construction Co. was to perform in detail, a summary of the work included in the Agreement provided as follows: 1. The project will include the following items: 2. All following projects will be with drawings, planning and design with infrastructure to support future enhancements. 3. Exterior stucco (select color with owner) 4. Exterior railings. (select sample with owner) 5. Windows moldings (select sample with owner) Molding around windows and doors. Total of 29 windows, four doors and one garage door. 6. Replace Garage doors (sectional door with remotes) 7. Replace Main door ($1500 allowance) 8. Interior paint (select color with owner) 9. Walls removals and openings. Job will be done with design and planning but not with any engineering involved we are not going to touch or move any hearing or structural support walls, or any detail that requires or will require engineering detail. Job includes opening walls and working around the bearing walls. In case owner decides to change the bearing walls, engineering fees will be applied and paid by owner. 10. Framing work and dry walls. Design provided by us, to be approved by the owner. 11. Flooring, tiles and wood. Labor and material. Allowance $3 by square foot. 12. Electrical and plumbing work, all as per drawings 13. Fireplace (side venting, electrical, option gas) in Master bedroom 14. Bathrooms remodelings 3) PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 2 22 23 24 25 26 27 28 1509689 15. Kitchen remodelings (providing full plan and design) 16. AC (modifications) . . . (SUF 1 19). In fact, despite timely payment by the Frickes, Construction Co. completed very little work. (SUF 9 20). C. Frank McSwain Begins Oversight of Fricke’s Home Remodeling Project for Construction Co. In early September 2017, after the Frickes had paid Construction Co. $94,500, Construction Co. employee Frank McSwain began to oversee certain aspects of the Home remodeling project. (SUF § 21). While Mr. McSwain had Just started working for Construction Co., he had worked for many years in various aspects of the construction industry. (SUF q 22). When Mr. McSwain first visited the Home, he saw one of the worst job sites he had ever seen. (SUF 123). He saw gaping holes in walls and floors and he observed materials haphazardly strewn around the house. (SUF q 24). There was trash and construction debris everywhere. Id. After Mr. McSwain's professional relationship with Construction Co. ended on November 2, 2017, he informed the Frickes that they were the victims of Mr. Arbib and Construction Co.’s fraudulent practices. (SUF 125). He explained that Construction Co.’s work was shoddy, as Construction Co. had hired unlicensed subcontractors to work on the Home and that the quality of the work performed did not meet the standards established by California and local building codes. Mr. McSwain also implored the Frickes not to close the walls — but to make sure a licensed plumber, electrician and framer inspected Construction Co.’s work before the walls were closed. (SUF q 26). While the Frickes paid Construction Co. $125,416, Mr. McSwain estimated that the value of the work Construction Co. performed at the Home that did not require correction was less than $25,000. Mr. McSwain estimated that this value is broken down as follows: $7,500 for demolition and trash removal, $4,250 for work skim coating and priming walls and ceilings, $5,000 as partial payment for scaffolding and $1,000 for some stucco work. (SUF 27). A $5,000 check the Construction Co. wrote to the stucco contractor subsequently bounced, and the Frickes had to 6 PLAINTIFFS RONALD AND NICOLE F RICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 1509689 personally pay the stucco contractor. (SUF § 28). The remaining work, for which the Frickes have paid many thousands of dollars, was not completed by Construction Co. (SUF 929). The Agreement provided that the remodeling project at the Home was to be completed by October 16, 2017. (SUF § 7). Construction Co. also violated California law by failing to have a responsible managing officer (“RMO™) supervising its construction activities, as California Business and Professions Code Section 7068(c) requires. (SUF 130). Mr. McSwain told the Frickes that Construction Co. did not have an actual person serving in that role for the project at the Home or any other active project. (SUF § 31). Instead, Mr. Arbib paid someone $750 every month to claim to be the RMO, when that person had no actual role at the any of the construction sites. (SUF 32). The failure of Construction Co. to have an actual RMO onsite at the Home exacerbated-the use of unlicensed subcontractors as no one on-site knew what they were doing. (SUF 933). On November 9, 2017, the Frickes’ legal counsel informed Mr. Arbib that Construction Co. ‘was to cease all work at the Home. (SUF 134). In addition to the $125,000 Mr. Arbib and Construction Co. received from the Frickes for construction work not performed, more than $28,000 in the Frickes’ personal property was stolen from inside the Home, including appliances and a stereo, during the time when Construction Co. had access to the Home. (SUF § 35). In a heated conversation with the Frickes, Mr. Arbib admitted to the theft of the stove, saying “You know what? I'stole the stove. It is gone. There is nothing you can do about it. You will never get it back.” (SUF § 35). The police officer who investigated concluded that the theft appeared to be an “inside job.” (SUF 36). While the Frickes do not have direct evidence to establish the Construction Co.’s complicity in these thefts, if nothing else, the theft of personal property demonstrates that the Construction Co. failed to adequately secure the Home during the time it was supposed to be remodeling the Home. (SUF 137). Given Construction Co.’s use of unlicensed subcontractors, it is not surprising that the work performed was shoddy. On or about November 19, 2018, one of Construction Co.’s unlicensed subcontractors told the Frickes that, when he questioned Mr. Arbib about the work not being completed to code, Mr. Arbib instructed him to do the work as cheaply as possible because the 7 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 Frickes were just “kittens.” (SUF { 38). Mr. Arbib also fired subcontractor Salvador Alonzo for using %-inch piping, which was to code, as opposed to cheaper %-inch piping. (SUF 9 38). D. The Frickes Hire Licensed Contractors to Repair Defendants’ Shoddy Work nractors to hepair Defendants’ dy and to Complete the Remodeling Project. After learning from Mr. McSwain about Construction Co.’s fraud from Mr. McSwain, the Frickes hired licensed contractors to inspect the Home and to repair the electrical, plumbing and framing work that Construction Co. had botched. (SUF 9 39). The contractors repaired the work performed by Construction Co. to satisfy applicable code requirements at a cost of over $37,000. (SUF 9 40). To correct the faulty electrical work Construction Co. performed, the Frickes’ licensed electrician had to do the following: (1) replace boxes that were installed but were not up to code (SUF 41); (2) start work by trouble shooting the remodel work that was done (SUF 942); (3) fix short circuits at different locations (SUF 943); (4) swap out damaged cable that was installed (SUF 144); (5) replace and correct connections and cables that were not run properly to various light boxes and switches (SUF 945); (6) replace cable where necessary due to the fact that it was underrated or too short for the purposes (SUF 9 46); (7) replace all recessed lighting that was installed due to it being not to code (SUF 947); (8) replace improper installation of light boxes with LED light boxes that meet code requirements (SUF 48), and (9) strap down all loose wiring (SUF 49). When the Frickes’ licensed electrician examined the work of Construction Co.’s unlicensed subcontractors, he saw signs of small fires in the Home that resulted from Construction Co.’s faulty wiring. (SUF § 50). To correct the faulty framing work Construction Co. performed, the new framing contractor had to do the following: (1) fix supporting beams in the master bathroom that were cut and displaced; (2) reinforce all engineering and framing in master bathroom with new studs, hangers and bolts to 2x12’s that were no longer supporting the roof: (3) bring all new framing up to code; “ tear out framing for master bathroom tub and reinstall framing for correct support up to code; (5) reinforce the roof on the master bedroom balcony due to installation of broken support beams; (6) swap out all framing that wasn’t up to code; (7) tear out framing for guest bathroom tub where 8 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 framing was done below code with no support; (8) install new aceon up to code for support of guest bathroom tub; (9) tear out all % inch plywood that was installed for flooring and replace with % inch plywood to be up to code; (10) install reinforced hangers in guest bathroom to support framing that was not done to code; and (11) install reinforced hangers in walk in closet to support framing that was not done to code. (SUF q 51). To correct the faulty air conditioning work performed by Construction Co., the Frickes’ contractor had to do the following: (1) replace air ducts that were torn out and damaged due to cutting through ducts and air conditioning lines; and (2) replace and reroute new duct lines due to the damaged caused by removal of duct lines. (SUF § 52). To correct the faulty plumbing work performed by Construction Co., the Frickes’ licensed plumber had to do the following: (1) tear out all previous piping installed and replace it with correct “L” pipes; (2) properly connect all pipes (which had been improperly connected) to the water line; (3) connect hot water to the main water line; (4) reconnect all connections to the main water line; (5) replace all valves that were incorrectly connected and leaking; (6) reconnect a damaged and leaking gas line that was cut incorrectly; (7) uncross the hot and cold water lines that were installed incorrectly; (8) replace cut water line to the balconies that were damaged and: leaking; (9) remove risers and install new risers for toilets and bidet because they were improperly installed too high; (10) add venting for the master bathroom toilet and bidet due to their not being up to code; and (1 1) replace all venting and piping that was installed and not up to code. (SUF § 53). When the Frickes’ licensed plumber examined the work of Construction Co.’s unlicensed subcontractors, he saw pipes installed by Construction Co.’s unlicensed contractors that would have dissolved within one year. (SUF 9 54). E. Defendant Suretec Issues Construction Bond to Construction Co. Defendant Suretec issued bond number 5141801, a $15,000 bond, to Construction Co. on January 1, 2016. (SUF § 55). III. LEGAL STANDARD Code of Civil Procedure section 437¢ requires the trial court to grant summary judgment if no triable issue exists as to any material fact, and if the papers submitted on the motion entitle the 9 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 moving party to judgment as a matter of law. Code Civ. Proc., § 437¢, subd. (c); Stratton v. First Nat. Life Ins. Co., 210 Cal. App. 3d 1071, 1083 (1989). A motion for summary adjudication may be made separately or as an alternative to a summary judgment motion. Code Civ. Proc., § 437c¢, subd. 0(2). Motions for summary adjudication are subject to the same rules and procedures as motions for summary judgment. Lunardi v. Great-West Life Assurance Co., 37 Cal. App. 4th 807, 819 (1995). A motion for summary adjudication can be directed to one or more causes of action, affirmative defenses, claims for damages, or issues of duty. Summary adjudication “shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” Code Civ. Proc., § 437¢, subd. (H(1). Under this statutory language, “a party may present a motion for summary adjudication challenging a separate and distinct wrongful act even though combined with other wrongful acts alleged in the same cause of action.” Lilienthal & Fowler v, Super. Ct., 12 Cal. App. 4th 1848, 1854-1855 (1993); accord, Exxon Corp. v. Super. Ct., 51 Cal. App. 4th 1672, 1688, fn. 11 (1997). IV. ARGUMENT A. There is No Factual Dispute that Construction Co. Breached the Agreement. =a —nplle hat Construction Co. Breached the Agreement. The undisputed facts show that Construction Co. breached the Agreement with the Frickes. The elements for a breach of contract claim are: (1) a contract, (2) performance or excuse for nonperformance, (3) breach, and (4) resulting damages. Reichert v. General Ins. Co., 68 Cal. 2d 822, 830 (1968). The Frickes entered into the Agreement with Construction Co. on June 15,2017. (SUF q 4). The Frickes satisfied their obligations under the Agreement. The Agreement called for the Frickes to make payments on a schedule based on the commencement of certain construction milestones, in violation of California law. (SUF 1 10). The Frickes satisfied the Agreements requirements by making the following payments to Construction Co.: (1) $1,000 on June 16, 2017; (2) $54,780 on June 27, 2017; (3) $38,720 on August 1, 2017; and (4) $30,916 on October 13,2017, for a total of $125,416. (SUF q 11). While the Frickes satisfied their contractual obligations by making payments according to the schedule provided in the Agreement, Credible breached the Agreement by failing to 10 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 | 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 satisfactorily perform the work identified in the Agreement. The Agreement provided that Credible was to complete a list of work on the Home, including: 1. The project will include the following items: 2. All following projects will be with drawings, planning and design with infrastructure to support future enhancements, 3. Exterior stucco (select color with owner) 4. Exterior railings. (select sample with owner) 5. Windows moldings (select sample with owner) Molding around windows and doors. Total of 29 windows, four doors and one garage door. 6. Replace Garage doors (sectional door with remotes) 7. Replace Main door ($1500 allowance) 8. Interior paint (select color with owner) 9. Walls removals and openings. Job will be done with design and planning but not with any engineering involved we are not going to touch or move any hearing or structural support walls, or any detail that requires or will require engineering detail. Job includes opening walls and working around the bearing walls. In case owner decides to change the bearing walls, engineering fees will be applied and paid by owner. 10. Framing work and dry walls. Design provided by us, to be approved by the owner. 11. Flooring, tiles and wood. Labor and material. Allowance $3 by square foot. 12. Electrical and plumbing work, all as per drawings 13. Fireplace (side venting, electrical, option gas) in Master bedroom 14. Bathrooms remodelings 15. Kitchen remodelings (providing full plan and design) 16. AC (modifications). See below for detail. Of the work to be performed, very little was actually completed. (SUF 719). While the Frickes paid $125,416 to Construction Co., very little of the work Construction Co. was to perform under the Agreement was completed at all, let alone in compliance with applicable building codes. (SUF 111). After the Frickes terminated the Agreement, their licensed contractors repaired the faulty electrical, plumbing and framing work that Construction Co. and its unlicensed subcontractors had performed. (SUF 20). See Section II(D) supra. This work illustrates Construction Co.’s numerous breaches of the Agreement as it highlights the work that was performed that was not up to code and shoddy. (SUF 9941 -54). The Frickes have suffered significant damages as a proximate result of Construction Co.’s breaches of the Agreement. They lost the money they paid Construction Co. without work being performed. (SUF q 16). In addition, they lost additional money they had to spend to repair the work 11 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 performed by Construction Co. to satisfy applicable code requirements. (SUF 140). As indisputable evidence shows that Construction Co. breached the Agreement, the Court should grant summary adjudication as to this claim. B. Suretec Is Liable Up to the Amount of the Bond Under Business and Professions Code Section 7071.5. The Frickes are entitled to recover the $15,000 bond for Construction Co., currently being held by Defendant Suretec, pursuant to Business and Professions Code Section 7071.5. That section provides for various classes of individuals who are entitled to receive bond proceeds: The contractor’s bond shall be for the benefit of the following: (a) A homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of this chapter by the licensee. (b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred. California law provides that “Under § 7071.5 , those bonds are essentially third-party beneficiary contracts, the penal sum protecting certain specified classes of people who are harmed in specified ways in dealing with the contractor.” In re Buena Painting & Drywall Co., Inc., 503 F.2d 618, 619 (9™ Cir. 1974). Licensed surety Suretec issued to Construction Co. a contractor’s license bond numbered 5141801 for $15,000 on January 1, 2016 (SUF q 55). As the Frickes fall into two of the classes of persons protected by the Business and Professions Code in sections 7071.5(a) and 7071.5(b), they are entitled to recover from Suretec the full amount of the bond: (a) As provided above, the Frickes are owners of the Home who contracted for home improvement upon their personal family residence. (SUF 991, 4). The Home was damaged as a result of Construction Co.'s use of unlicensed subcontractors, in violation of Business and Professions Code Section 7118. (SUF 17 26, 41-54). (b) The Frickes are property owners who contracted for the construction of a single-family dwelling who were damaged as a result of Construction Co.’s violation of Business and Professions Code Section 711. The Home is a single-family dwelling, and was not intended for sale or offered 12 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1509689 for sale at the time the damages were incurred. (SUF 756). Accordingly, by reason of the conduct of Construction Co., Defendant Suretec is liable to the Frickes upon said license bond for the full $15,000 amount of the bond. V. CONCLUSION ~ For the foregoing reasons, the Court should grant Plaintiffs Ronald Fricke and Nicole Fricke's Motion for Summary Adjudication. DATED: July 11, 2018 GLASER WEIL FINK HOWARD AVCHEN & SHAPIRO LLP . Fe Vor FELYON T. NEWELL Attorneys for Plaintiffs RONALD FRICKE AND NICOLE FRICKE 13 PLAINTIFFS RONALD AND NICOLE FRICKE'S MOTION FOR SUMMARY ADJUDICATION Gl as er We il 10 11 12 13 14 15 16 17. 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS AN GELES I am employed in the County of Los Angeles, State of California; I am over the age of 18 and not a party to the within action; my business address is 10250 Constellation Boulevard, 19th Floor, Los Angeles, California 90067. On July 12, 2018, I served the foregoing document(s) described as Plaintiffs Ronald Fricke and Nicole Fricke’s Motion for Summary Adjudication on the interested parties to this action by delivering a copy thereof in a sealed envelope addressed to each of said interested parties at the following address(es): Shai Oved Attorneys for Defendants Shaul Arbib and ‘THE LAW OFFICES OF SHAI OVED Credible Construction, Inc. 7445 Topanga Canyon Blvd., Ste. 220 Canoga Park, CA 91303 T: (818) 992-6588 // F: (818) 992-6511 E-mail: ssoesq@aol.com ‘James J. Orland Attorneys for Defendants Shaul Arbib and ORLAND LAW GROUP Credible Construction, Inc. 1334 Parkview Ave., Ste. 100 Manhattan Beach, CA 90266 T: (310) 546-8139 // F; (310) 546-8193 E-mail: jim@orlandlawgroup.com Christian J. Gascou Attorneys for Defendant SureTec Indemnity GASCOU HOPKINS LLP Company 9696 Culver Blvd., Ste. 302 Culver City, CA 90232 T: (310) 785-9116 // F: (310) 785-9149 E-mail: cgascou@gascouhopkins.com Bd (BY MAIL) I am readily familiar with the business practice for collection and processing of correspondence for mailing with the United States Postal Service. This correspondence shall be deposited with the United States Postal Service on the day set forth above in the ordinary course of business at this Firm's office address in Los Angeles, California. Service made pursuant to this paragraph, upon motion of a party served, shall be presumed invalid if the postal cancellation date or postage meter date on the envelope is more than one day after the date of deposit for mailing contained in this affidavit. x] (State) I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed this 12th day of July, 2018, at Los Angeles, California. LD.EMGE <= Apgar?” PROOF OF SERVICE EXHIBIT 6 Christian J. Gascou A From: Ronald W. Hopkins Sent: Wednesday, September 12, 2018 4:09 PM To: fnewll@glaserweil.com Cc: Christian J. Gascou; Kristina Sumabat Subject: Frickes v. Credible Construction Attachments: Stipulation re SA Motion.docx Felton--as we discussed this morning-we would appreciate your consideration of the attached stipulation to withdraw the SA motion as to SureTec only. Otherwise--we would need to file an opposition next Monday which would primarily just refer to the interpleader. I'd appreciate it if you could let us know by Friday. Also--we would be happy to participate in discussions among the claimants re an agreed pro rata interpleader distribution. The majority of these types of cases settle in that manner. Thanks. rwh