214 Cal. App. 4th 329
Cal. Ct. App.2013Background
- Webcor entered GMP contract with Wilshire for a 23-story condo project; GMP initially $65.5M, later increased to about $81M via change orders, with Webcor asserting a $13.5M additional entitlement.
- Webcor filed breach of contract and mechanism’s lien actions against Wilshire and many unit owners; a settlement later involved Wilshire alter ego defendants.
- As part of settlement, $32M stipulated judgment against Wilshire, but with carve-outs stating it would not offset the lien against unit owners and that alter egos would cooperate on the lien.
- Settlement also adopted PCCO 50 raising GMP value to $95.5M for labor and services provided under the GMP contract; unit owners contested this value.
- Before trial, the court ruled the lien amount would be based on the reasonable value of Webcor’s work, excluding contract-based defenses, citing ECC, which the court treated as controlling.
- The unit owners sought relief by writ, arguing ECC conflicted with the statute; the court stayed, and this court granted relief to allow evidence on GMP value; on remand, taxpayer court to apply former §3123(a) to determine lien as lesser of contract price or reasonable value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How does former §3123(a) set lien value when owner is non-party to contract? | Webcor: contract price should control; §3123(a) favors contract price as ceiling. | Unit owners: ECC dictates value based on reasonable value only when owner is non-party. | Statute allows lesser of contract price or reasonable value; ECC dicta rejected. |
| Is the GMP agreement's 'agreed price' relevant to lien amount after settlement? | Value set by PCCO 50 should govern lien. | Settlement mechanics artificially set value; not binding for lien amount. | Remand proper to determine if settlement conclusively fixes GMP value. |
| Did ECC’s treatment of §3123(a) bind the trial court or is it dicta? | ECC is controlling precedent for non-party owner scenario. | ECC dicta; not binding. | ECC's discussion deemed persuasive but dicta; not binding; reversal of misapplication. |
| May settlement evidence establish the agreed GMP price for lien purposes on remand? | Settlement agreement can determine agreed price. | Collateral agreement, assets insolvent; not conclusive. | Remand permitted to allow evidence and decide if agreement conclusively fixes GMP value. |
Key Cases Cited
- ECC Construction, Inc. v. Ganson, 82 Cal.App.4th 572 (Cal. App. 2000) (lien value when owner not party to contract and other issues; dicta on §3123(a))
- Connolly Development, Inc. v. Superior Court, 17 Cal.3d 803 (Cal. 1976) (mechanic’s lien attachment and scope under lien law)
- Roberts v. Spires, 195 Cal. 267 (Cal. 1925) (contract price as limit of liens under lien law)
- Forsgren Associates, Inc. v. Pacific Golf Community Development LLC, 182 Cal.App.4th 135 (Cal. App. 2010) (statutory interpretation of lien value and contract terms)
- Britton v. Dallas Airmotive, Inc., 153 Cal.App.4th 127 (Cal. App. 2007) (statutory construction principles)